'Exempt pulses from VAT for another year'

Special Correspondent

Chamber seeks parity in rate of taxes across the country It seeks parity in rate of taxes across the country

Chamber's charges Maharashtra is eating into revenue of the StateDue to low tax on pulses in Maharashtra, farmers from Karnataka are selling their produce in that StateMany mills are closed in Karnataka, while those in Maharashtra are flourishing

GULBARGA: The Hyderabad Karnataka Chamber of Commerce and Industry on Thursday urged Finance Minister P.G.R. Sindhia to extend the exemption of pulses from Value Added Tax (VAT) for one more year and also exempt husk and bran of cereals and pulses from VAT.

HKCCI President Suresh Nandyal and Secretary Umakant Nigudagi, sought this in a pre-Budget memorandum submitted to Mr. Sindhia, who also holds the Medium and Small and Industries and Infrastructure portfolios in the Cabinet.

The State Government had exempted pulses from VAT for one year in 2005-06. The HKCCI said that the extension of exemption from VAT will help pulse growers and industry meet the growing challenge from Maharashtra, which was eating into revenue of the State through its pulses-friendly tax regime. The memorandum said the Finance Minister should restore parity in the rates of taxes on various commodities in different States.

The Hyderabad Karnataka region in the State is considered the Red Gram Bowl of South India and the pulses processing is a major industry in the area.

Diversion of trade

However, due to disparity in taxes between Karnataka and Maharashtra, there has been a diversion of trade in the recent years, affecting the traders in the region and reducing the revenue to the exchequer. Mr. Nandyal and Mr. Nigudagi said due to the low tax on pulses in Maharashtra, farmers preferred to sell their produce in that State rather than here. On an average, the farmer got nearly Rs. 200 more per quintal for selling their produce in Maharashtra due to absence of commission and low market fees.

Mills closed

According to the information available with the HKCCI, only 50 per cent of the red gram cultivated in Hyderabad Karnataka is sold in the State while the remaining 50 per cent is diverted to Maharashtra.

They said that 40 of the 125 medium dall mills in the Hyderabad Karnataka region is closed due to the present taxation policy on pulses by the State Government, while the dall mills in the Maharashtra were flourishing. Of the total 175 dall mills in Maharashtra, 100 were big and all the mills in Maharashtra were operating at full capacity.

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