GST: Zero duty will help farmers but blow hole in state coffers

Written by Harish Damodaran
, Anju Agnihotri Chaba
| New Delhi/jalandhar |
Published:May 20, 2017 4:39 am


Haryana and Madhya Pradesh, too, charge 5 per cent VAT and 2 per cent market/mandi fees. Besides, Haryana, like Punjab, has a 2 per cent rural development cess, while MP levies a 0.2 per cent “nirashrit shulk” (destitute fee) on paddy and wheat. (Representational image)

Zero duty for all primary produce — from foodgrains, oilseeds, fruits & vegetables, sugarcane/gur, milk and spices, to fish and meat — under the Goods and Services Tax (GST) regime may be a shot in the arm for Indian agriculture and farmers. But the decision, approved at the two-day meeting of the GST Council that ended in Srinagar Friday, could blow a hole in the finances of many states.

Punjab, for instance, currently charges a 5 per cent value added tax (VAT) on both wheat and paddy. In addition, it imposes an infrastructure development cess of 3 per cent, a rural development cess of 2 per cent and a market fee of 2 per cent. The total state levies on the basic grain purchase price — not counting the 2.5 per cent fee payable to commission agents (arhtiyas) — thus comes to 12 per cent.

Read | GST Council unveils 4-slab rates for services, exempts healthcare, education, non-AC travel

Taking aggregate wheat arrivals of 11.90 million tonnes (mt) and 16.60 mt of non-basmati paddy from the 2016-17 crop in Punjab’s mandis, the 12 per cent levy at the corresponding minimum support prices of Rs 1,625 and Rs 1,510 per quintal for the two grains would have generated revenues of over Rs 5,300 crore for the state government.

Moreover, this is true not just for Punjab.

Haryana and Madhya Pradesh, too, charge 5 per cent VAT and 2 per cent market/mandi fees. Besides, Haryana, like Punjab, has a 2 per cent rural development cess, while MP levies a 0.2 per cent “nirashrit shulk” (destitute fee) on…

Read the full article from the Source…

Leave a Reply

Your email address will not be published. Required fields are marked *