Cong remembers promise, govt to slash tax on nonMSP crops
BOOSTING DIVERSIFICATION Market fee on cotton, basmati, others to be on a par with neighbours
CHANDIGARH: The Congress manifesto for Punjab polls had promised to boost crop-diversification by lowering state taxes on crops not covered under the minimum support price (MSP) regime.
However, faced with an acute cash crunch, the Captain Amarinder Singh-led government had last month hiked market fee and rural development fee on crops by 1% each, to 3%.
At 6%, Punjab’s purchase tax on crops is the highest among states. While on one hand, the hike has raised the hackles of Central government which will have to shell out more to procure wheat and paddy from Punjab, it has also hit traders and farmers in the state.
It made cotton, basmati and other crops not covered under MSP, uncompetitive owing to lower taxes in neighbouring states, thus defeating the very purpose of the government’s ambitious crop diversification plan.
Already facing wrath of farmer unions which have dubbed the government’s attempt to write off crop loans of 10 lakh marginal and small farmRajasthan ers as “too little, too late”, the state government has decided to forgo the gain from the hike on non-MSP crops.
Speaking to HT, Punjab finance minister Manpreet Badal said, “We had promised to lower taxes to encourage farmers to shift from the wheat-paddy cycle. The market fee and rural development fee will be slashed to make the rates competitive with the neighbouring states.”
While Haryana collects 4% tax on crops, ever since the valueadded tax was been subsumed by the Goods and Services Tax (GST) since July, it is 1.6% in
and 2.4% in Uttar Pradesh.
Before the hike, Punjab collected ₹900 crore each as rural development fee and mandi fee. The hike is expected to mop up another ₹900 crore annually.
The Centre has been opposing Punjab’s high taxes and had earlier
refused to pay the infrastructure development cess levied by the state on foodgrains.
Even during the last week’s meeting of GST council in Hyderabad, Union finance minister Arun Jaitley brought up the issue of tax hike with Manpreet Badal.