Taxing times for coconut growers after GST rollout

Traders, according to growers, are bringing down copra prices citing the increase in tax rate

Tiptur in Tumakuru district and Arsikere in Hassan district are the prime coconut markets in the State.

Coconut growers, already in distress because of continuous drought, have another burden to bear. With the rollout of the Goods and Services Tax, the tax on copra has gone up by 3 percentage points. Traders, according to the growers, are bringing down copra prices citing the increase in tax rate.

Under the previous tax regime, copra attracted 2% VAT, besides 1.5% market fee. Now, the tax has gone up to 5% under GST. “Earlier, traders would quote less saying the demand from northern States had come down. Now, they use GST as another excuse to price the commodity very low,” said Putte Gowda, a coconut grower of Shettihalli in Channarayapatna taluk.

Tiptur in Tumakuru district and Arsikere in Hassan district are the prime coconut markets in the State. G.B. Basavaraj, a commission agent at Arsikere APMC market, told

The Hindu

: “If a quintal of copra is sold at ₹15,000, the additional tax burden is ₹450. In case of a truckload, the additional burden is over ₹45,000,” he said. The additional burden falls on the growers and customers. “For consumers, the burden is marginal. Farmers are the worst hit.”

However, Biligere Nagesh of Tumakuru, a graduate in agriculture, feels differently — that GST does not affect farmers. “The rate of copra does not depend on GST, but on the demand. If copra is in surplus, the rate falls even if there is demand. If the quantity of copra coming to the market is less and the demand is more, then the rate rises,” he said.

Soundaraj T.S., a trader in Tiptur, believes the same. “The trader’s job is to collect 5% tax from the buyer and remit it to the government. There is no loss or gain for the trader. The trade has come down in the market as many traders are not ready to switch over to GST,” he said. Officials blame traders for the fear of GST among farmers. B.R. Srihari, Deputy Director of Agriculture Market, Hassan, said: “Copra is valued anywhere between ₹12,000 and ₹14,000 a quintal. Last year, there was no GST, yet the price went below ₹6,000 a quintal, forcing the government to announce a minimum support price. This shows that GST has hardly any impact on copra price,” he said.

Traders are glum because the GST regime streamlines the copra market, discouraging off-market transactions. “Traders have to maintain records, issue bills and pay taxes regularly. Earlier, some traders used to avoid income tax through off-market transactions. Now such activities are not easy,” Mr. Srihari said.

Another official said, “It is true that the traders put the burden of additional tax on farmers. However, given the current price in the market, farmers need not worry much.”