The Hindu Business Line : Perishable food items must be exempted from VAT: Minister

THE Union Minister for Food Processing, Mr Subodh Kant Sahay, has said he would moot a recommendation at the forthcoming meeting of the empowered committee of State Finance Ministers of VAT to exempt processed foods from VAT.

This move is aimed at encouraging investment in the domestic processed food industry and making it more competitive.

"In fact, I feel perishable food items should be exempted from VAT, while the VAT on non-perishable food items should not be more than 4 per cent. At present, the VAT incidence on processed foods varies from 0 per cent to 12 per cent. There is no uniformity and the high level of taxation is impeding the growth of the food industry," Mr Sahay said.

He said that, as a result, about fruits and vegetables worth Rs 50,000 crore get wasted every year. "The growth in the food industry is only about 2 per cent," Mr Sahay said.

Further, the Minister said he hoped that the integrated food law, which was cleared by the Cabinet earlier this month, would be placed next week before Parliament for approval.

"The unified food law would remove multiplicity of authorities governing the food sector by bringing all regulators under a single authority. This would harmonise about 16 laws governing the food sector under one umbrella," Mr Sahay said.

Mr Sahay said the Government was also working on a draft policy for the liquor industry, which would aim to provide a uniform tax structure for the industry. "However, there are various complications in this... as this is a State subject. We will take this up once the integrated food law becomes operational," he said.

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