The Hindu Business Line : Rubber dealers in a spot over VAT

They say implementing the VAT will make rubber trade more complicated. To make matters worse, the State is now planning to impose a purchase tax on the closing stock on March 31 - the last day before the VAT comes into effect.

If the State Government imposes the 12.65 per cent purchase tax on the stock, the same will attract only a four per cent VAT the very next day. The Government promises to reimburse this tax within six months, but dealers say they stand to lose money.

Some of the dealers under the aegis of the All-Kerala Rubber Dealers' Association are planning to stop procuring rubber from March 1 unless the State Government clarifies on the issue.

"If we pay the 12.65 per cent purchase tax on March 31, the same stock will have a VAT of only four per cent from April 1 onwards. This means that for every kg of rubber in our stock, we will incur a loss of Rs 6 to Rs 6.50 when we sell it again," said Mr Thomas J. Maippan, President of the Association.

Rubber dealers earn a wafer-thin margin of 20 to 25 paise for every kg they trade, and cannot afford to incur such loss. "It is an issue of survival for the dealers," Mr Maippan said.

Currently, the purchase tax on rubber is levied at the last purchase point in the State, upon the buyer. The dealers who sell the commodity to outside the State also pay the purchase tax.

Mr N. Radhakrishnan, President of the Cochin Rubber Merchants Association, says the State Government has complicated the matter for rubber by deciding to impose the VAT on the first point of purchase.

"What this means is that the onus of paying the VAT will be on the small-time dealers who buy the rubber from farmers. For them, maintaining the books and accounts could prove to be a difficult task," he said.

The small primary dealers, who eke out a livelihood by trading in meagre volumes, will be in a way responsible for the entire tax collection from the rubber trade. These dealers have never had to pay the purchase tax so far, and now will have to handle the complexities involved in keeping books etc.

He said given the nuances of rubber trade, the State should continue to impose the tax on the last point of purchase. The State Government is complicating the introduction of VAT by treating the purchase tax on rubber as sales tax, he added.

On the move to impose the purchase tax on the closing stock, Mr Radhakrishnan said there was no point in collecting the tax and later reimbursing it, when the Government might as well not collect it in the first place.

"The Kerala Sales Tax Act does not allow taxing the rubber dealers. The Government now is planning to do something that is not envisaged in the Act and put a liability on us," he said.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
To meeet priority sector lending targets — Foreign, new pvt banks move to buy out farm loans from PSBs

Discoms file new papers for free power to AP ryots

Rubber dealers in a spot over VAT

Rubber rates steady

Sweet rush: Sugar industry turns bullish

Beeyu Overseas plans to buy tea factory in Lanka

Tea body plea on VAT

Flip-flop on edible oil policy — for whose benefit?

World pepper output may decline