Tax Rate circular for Yarn issued by Vat department a) Tax rate on all types of yarn (including cotton yarn), their waste and sewing thread reduced to 3.3% b) Tax Rate on 100% Polyester Yarn, polyester top, polyester chips, polyester staple fibre and waste and acrylic fibre retained at 5.5% .1. Vat Advance tax rate on all types of yarn including cotton yarn , waste of yearn and sewing threads reduced to 3.3% . Earlier rate was 5.5% for all types of yarn except cotton yarn which was 4.5%. However advance tax rate on 100% polyester yarn , polyester top, polyester chips, polyester staple fibre and its waste , acrylic fibre retained at 5.5%. These changes shall be effective from 01-04-16 vide Notification dated 31-03-2016. As per Punjab Vat Notifications issued Earlier in the day on 01-04-2016, 100% polyester yarn was brought to advance tax under 5.5%. However, in later spate of notifications, it was replaced by “100% polyester filament yarn”. Thus 100% polyester yarn shall get covered by 3.3% tax rate only. Partially oriented Yarn i.e. POY shall also get covered by 3.3% tax rate.