Haryana seeks refund of purchase tax on foodgrain      

The Haryana government has asked the Centre to defer introduction of the goods and services tax (GST) by a year and compensate the state for the loss of Rs 600-crore revenue on account of the purchase tax levied on foodgrain like wheat and paddy. The state has also asked for leeway in levy of VAT on agricultural inputs like fertilisers and pesticides.

“The state needs to be compensated in terms of tax on foodgrain,” finance minister Pranab Mukherjee agreed.

Speaking at the meeting of finance and taxation ministers, convened by Mukherjee in New Delhi on Tuesday, Haryana finance minister Ajay Singh Yadav said the state earned about Rs 600 crore per annum from the purchase tax levied on foodgrain which it would lose after introduction of GST as a consensus had been reached among the states to exempt foodgrain from GST. “Either the purchase tax on food grains be not subsumed in GST, or some suitable mechanism be provided to compensate the state,” he said, adding a perfect tax system and total computerisation were necessary for switching over to GST.

“Since many states are not equipped, it is desirable that GST rollout be deferred by at least one year,” he demanded but assured the Centre that Haryana would not shy away from its responsibility of moving towards the new regime.

Yadav said Haryana made commendable contribution to the Central grain bowl and incurred huge expenditure in the shape of subsidy on seeds, pesticides, fertilisers, free power supply to the farmers. 

Source : Financial Express, dated 11/11/2009