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Growers have sought full exemption from paying tax on sale of coffee grown and cured by them.
As of now, 25 per cent of the income derived from such a sale is taxed in line with Rule 7B of the Income Tax Rules, 1962. The growers who recently met the Parliamentary Standing Committee on Commerce said instead of getting benefit for value addition, they are being taxed.
The issue relating to Rule 7B came up before the Parliamentary Standing Committee on Commerce, headed by its Chairman, Mr Shanta Kumar, in Bangalore.
Coffee Board members and few senior Karnataka Government officials led by the Chief Secretary, Mr S.V. Ranganath, apprised the committee about the drawbacks of Rule 7B.
“At the meeting, problems faced by the coffee industry especially on account of Rule 7B was discussed in detail,” Mr A. Nanda Belliappa, Coffee Board member and coffee grower from Somwarpet (Kodagu), told Business Line.
“Coffee growers discouraged by Rule 7B are forced to sell coffee at the farmgate without processing or value addition. After introduction of Rule 7B, no grower is selling coffee through Indian Coffee Trade Association (ICTA) auctions. This scenario has led to deterioration of coffee quality in India,” said Mr Bose Mandana, former chairman of Coffee Board and a senior coffee planter from Suntikoppa (Kodagu).
The Kodagu Coffee Growers' Co-operative Society (KCGCS) which has 13,000 small growers as its members, rues that only a handful of them are processing coffee and selling it through ICTA due to Rule 7B. “Growers are not getting the value addition benefit; instead they are taxed for it. Rule 7B may have helped few corporates, but definitely not coffee growers,” explains Mr Mandana.
According to Mr Belliappa, “We have told the parliamentary panel that after curing by the grower it is still an agricultural product. It does not take a different form like roasted or grounded.”
“The panel took stock of the impact of Rule 7B on the industry and I am sure they are convinced that it is hurting the industry and has assured us that it would be taken up with the Union Commerce and Finance ministry,” he added.
anil.u@thehindu.co.in
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