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In a relief to the beleaguered coffee, tea and rubber growers in Karnataka, the State government has proposed to abolish the agriculture income tax with effect from April 1, 2016.
“There is a long standing demand of growers of coffee, tea, rubber and other plantation crops to abolish Agricultural Income Tax. I propose to abolish Agricultural Income Tax with effect from 1st of April 2016,” Karnataka Chief Minister Siddaramaiah said presenting the State Budget for 2016-17 here on Friday.
With this, Karnataka, the largest coffee producer, has followed the neighbouring Tamil Nadu, which had abolished agriculture income tax way back in 2004. Even Kerala has provided a relief to the planters community by exempting the income tax for a year in 2016-17.
Karnataka’s latest move will provide relief to about two dozen companies such as Tata Coffee and Bombay Burmah Trading Corporation that operate coffee, tea and rubber plantations in the State besides thousands of individual coffee growers. Plantation companies had to pay a 35 per cent tax on their net income in the State and the total outgo in the State is estimated at around ₹20 crore.
“It is a good news for the plantation industry and will give us a boost,” said Baba PS Bedi, Chairman of the Karnataka Planters’ Association (KPA). Bedi further said the proposed move would provide some relief for the plantation sector that is becoming unviable, reeling under the impact of declining realisations and rising input costs.
Though Karnataka had suspended the agriculture income tax for individual growers way back in 2004 when the coffee prices had touched a 100-year-low of around 0.40 cents per pound, the growers had to wait for the notification every year exempting the income tax. “It was a kind of Damocles Sword hanging on our head. Now, with this budgetary announcement, we need not have to worry at all,” said N Bose Mandanna, a large grower at Suntikoppa.
K Kurian, Managing Director of Devon Plantation & Industries Ltd, said the move would help the plantation companies to re-invest in developing their estates in the long run.
Besides providing a higher allocation of ₹4,344 crore to the agriculture department, Karnataka is targeting to distribute ₹11,000 crore in agriculture loan to 23 lakh farmers in the State. To implement the new crop insurance scheme during 2016-17, the State has earmarked ₹675.38 crore.
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