CII seeks tax sops for agri sec­tor in Bud­get 2019

The Hindu Business Line - - TAKE 500 - TV JAYAN

An ap­pro­pri­ate tax ex­emp­tion to seed com­pa­nies, down­ward re­vi­sion of Goods and Ser­vices Tax (GST) on or­ganic in­puts, crop pro­tec­tion prod­ucts and agri­cul­tural im­ple­ments and en­hanced sub­sidy on in­fra­struc­ture cre­ated in ru­ral area for farm pro­mo­tion were among the ma­jor pre-Bud­get tax rec­om­men­da­tions pro­posed by the Con­fed­er­a­tion of In­dian In­dus­try (CII).

In its rec­om­men­da­tions sub­mit­ted to the Fi­nance Min­istry, the CII also urged the gov­ern­ment to de­sist from slap­ping a com­mod­ity trans­ac­tion tax (CTT) on agri-com­modi­ties traded on fu­tures mar­ket till it at­tains cer­tain ma­tu­rity. In­tro­duc­tion of CTT, it said, on pro­cessed com­modi­ties such as sugar, soya oil, RBD palm oil, cot­ton­seed oil­cake and guar gum has al­ready in­creased trans­ac­tion cost, lead­ing to a high cost of hedg­ing for value chain par­tic­i­pants.

Even though the GST on fer­tilis­ers is 5 per cent, ma­jor raw ma­te­ri­als such as am­mo­nia and naph­tha con­tinue to at­tract 18 per cent, re­sult­ing in an in­verted rate struc­ture for fer­tiliser sec­tor. Sim­i­larly, crop pro­tec­tion prod­ucts, which are es­sen­tial for cut­ting crop losses, are levied 18 per cent, adding to farm­ers’ cost and there is an ur­gent need to bring it down to 5 per cent, CII said.

Or­gan­ics and brand­ing

Sim­i­larly, there is no sep­a­rate cat­e­gory for or­ganic in­puts for both crop nu­tri­tion and pro­tec­tion. While there is nil tax on un­branded prod­ucts, branded or­ganic ma­nure and al­lied prod­ucts are levied 12 per cent. Since farm­ers trust branded prod­ucts more, they end up buy­ing them and thus in­cur more ex­pense. Sim­i­larly, GST levied on sea­weed-based bio-stim­u­lant is 18 per cent, and this has to be brought down to nil.

While in­come earned from agri­cul­tural op­er­a­tions are ex­empt from cor­po­rate tax un­der Sec­tion 10 (1) of the In­come Tax Act, 1961, seed com­pa­nies, whose ac­tiv­i­ties are sim­i­lar to those un­der­taken by cul­ti­va­tors, do not en­joy a sim­i­lar ben­e­fit. This is de­spite the fact that the Direc­torate Gen­eral of In­come-tax (Re­search) in the past in­ferred that 90 per cent of the profit earned by seed com­pa­nies could be ex­empt from tax. The trade body sug­gested set­ting up of an ex­pert com­mit­tee to re­view past stud­ies and rec­om­mend an ap­pro­pri­ate por­tion of prof­its of seed firms that can be con­sid­ered for ex­emp­tion as agri­cul­tural in­come.

Farm equip­ments

Even though prior to the im­ple­men­ta­tion of GST, there was no ex­cise duty on agri­cul­tural equip­ment and the value-added tax (VAT) was around 5-6 per cent. There were States like Tamil Nadu that had com­pletely ex­empted VAT on farm mech­a­nised prod­ucts such as paddy com­bine har­vesters. With GST now be­ing 12 per cent, there has been sub­stan­tial in­crease in over­all cost to the farmer for pur­chas­ing the equip­ment.

The CII said there is need for re­duc­ing GST rates on ad­vanced agri­cul­tural equip­ment to 5 per cent from the ex­ist­ing 12 per cent. Sim­i­larly, the rate of many valu­able parts used in har­vest­ing and thresh­ing ma­chin­ery are ei­ther 18 per cent or 28 per cent. This also needs to be ra­tio­nalised and brought down to 5 per cent.

Be­sides, the CII also sug­gested bet­ter sub-clas­si­fi­ca­tion of to­bacco leaves un­der GST as the cur­rent regime re­sults in anom­alies, bet­ter in­cen­tives for cold chain and si­los and the more weighted de­duc­tion of 150 per cent on ex­pen­di­ture in­curred on agri­cul­tural ex­ten­sion ser­vices.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.