The Hindu Business Line : Budget belies hopes of plantation sector: APK

The Association of Planters of Kerala (APK) has said that the State Budget has dashed all hopes of the plantation industry, especially the tea sector, which has been reeling under a crisis over the last eight years.

The APK’s hopes of getting some relief in this year’s Budget have been belied, Mr D. B. King, Chairman, and Mr Prince Thomas George, Secretary, APK, said here on Friday.

During a pre-Budget discussion, the APK had explained the problems to the Finance Minister and had demanded the withdrawal of the agricultural income tax (AIT) and the plantation tax, as was dome in the neighbouring States. There was also a plea to waive the value-added tax (VAT) on tea until such time as its fortunes revived.

In his Budget speech, the Finance Minister has stated that `planters would be eligible for input tax credit under the Kerala VAT Act on purchases of fertilisers and fertilisers. Since these expenses could be deducted under the Kerala AIT Act, it is proposed to remove this facility and amend the statute accordingly.’

But the APK representatives said that the accounting principles do not allow claim of input tax set-off or expenses under the AIT Act. Set-off of input tax and claim of expense under the AIT Act cannot be claimed simultaneously.

While accounting for a purchase, only the cost of the material is claimed as expense under AIT. The input tax is debited to a separate account, which is set off against the output tax. Earlier under the Kerala General Sales Tax regime, the total amount was being claimed as cost of purchase. But, under the KVAT Act, this is not the case.

Further, the Finance Minister has stated that planters have been made eligible for input tax credit. But the assessing officers in their own wisdom are not allowing the set-off against this input tax credit to the plantation industry.

It is sad that the planters who pay some of the highest taxes (as much as 50 per cent of the income as AIT) are singled out for harsh treatment, the APK representatives said.

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