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The
representation sent to union finance and food processing
ministries by the Assocham president Dr Swati Piramal
pointed out that the government wanted to increase
processing levels of food products to 10% from current
2% which would be possible if current tax regime was
extended after GST was executed.
The Chamber has, however, proposed that certain
processed items like tobacco products and alcoholic
beverages which currently fall under the category of
demerit goods should, however, be taxed at higher rates
to make up the tax kitty.
Dr Piramal said that processed fruit and vegetables
products and products like ready to eat foods, mithai &
namkeen and bakery products should be put in the zero
rated category so that these are exempted from central
excise as was the case now after the GST was put for
execution.
In addition, the Chamber also recommended that all
primary agriculture products, including staples like
rice, atta, dal, etc should be at zero rated category
and all other processed foods be placed at special state
GST rate of 4%.
The chamber has clarified that in case a Single GST
regime is adopted, the combined GST should not exceed
4%, with primary agriculture products being totally
exempted. The Assocham has further highlighted that this
position of GST as recommended by it above is revenue
positive. With the growth of this sector, the revenue
collected by way of taxes on inputs (i.e.
packaging-materials, food ingredients, plant and
equipment, technology inputs etc) is significant and
will continue to grow.
The Chamber has also requested the government to
consider measures in a sympathetic manner such as
uniform classification of all processed food products
across Centre and states as per HS Code.
Organisations having operations in various states in the
country should be given the facility of single
registration and for making payments at one central
location and electronic filling of returns and
electronic payment of dues be facilitated.
Also, the old procedure of Road Forms for entry of goods
is still continuing in some states. This needs to be
done away with to ensure faster movement of goods. In
some states octroi/cess is still being charged for entry
of goods. These levies should be abolished. Central
sales tax procedure also need to be withdrawn at the
earliest.
India is the largest/second largest producer of food
commodities including fruits & vegetables, milk, wheat,
rice, spices, etc. in the world. However the potential
of this sector for processing has remained very low (at
about 2%) as compared to various other countries e g
China (27%), Philippines (78%), Brazil (70%), Malaysia
(83%), USA (65%) and U K (88%).
Lack of processing results in huge wastages of our agri-produce,
estimated at 35-40% valuing Rs 35,000 to 50,000 crore
annually. A developed processing industry would help
reduce these wastages and raise farm incomes.
Food processing sector is known to have a very high
multiplier effect in terms of allied trades and
industries. With every person directly employed in
processing, about 100 persons get employment in related
functions / fields, e g growing, post-harvest handling,
storage, transportation, packaging materials, food
ingredients, fuel, utilities, distribution, technology
inputs, plant and equipment, testing and analysis,
training, research and development, retailing,
infrastructure, etc. The employment potential is
extremely high.
Source
: fnbnews.com, India, dated 21/10/2009 |
