The Hindu Business Line : Hill produce traders in Kerala seek changes in VAT

THE Cochin Hill Produce Merchants Association (CHPMA) has appealed to the Chief Minister, Mr Oommen Chandy, to initiate steps to modify the recently introduced value-added tax system.

In a memorandum to the Chief Minister, the association has also sought certain clarifications on the provisions in the VAT Act relating to the services of commission agents.

Mr Vishwanath Agarwal, President, CHPMA, said that the principal purchases goods from the unregistered dealer by paying purchase tax, 4 per cent in the case of pepper, and brings it to the godowns of the commission agents in the terminal market and sells it on behalf of the principal and collects the tax. In this case, he pointed out, it is not clear what the commission agents should do so as to get the input tax credit to the principal.

Besides, in the VAT system, Kacholam, Kapur Kachri, Koligin, turmeric bulbs and maize have not been included in any of the schedules and hence it will attract 12.5 per cent tax, he said. These items, therefore, need to be included in the third schedule of the VAT Act, he said.

As per the provisions of the previous KGST Act, dry ginger was not attracting any tax in the State. But in the VAT, tax is being collected at four per cent. Karnataka produces 90 per cent of the ginger produced in the country and a good chunk of it is being brought to Kerala.

When VAT was introduced in Karnataka it has included ginger in the first schedule and hence no tax is levied there. However, in Kerala, the item is included in the third schedule and as a result attracts four per cent tax, he pointed out. This would lead to a shift in ginger trade to the neighbouring State, he cautioned.

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