Comments
Sugar mills in Tamil Nadu have been handed a nasty surprise by the State Government levying a 5 per cent VAT on sugar from today.
Simultaneously, the government has also done away with the purchase tax of ₹ 60 a tonne on sugarcane. While this has been a long pending demand of the industry, it is of little consolation as the tax on sugar is more than double this level.
The Government has notified these decisions in orders published yesterday.
Given the prevailing market conditions of low sugar prices, the tax component cannot be passed on to the consumers, according to industry sources.
Palani G Periasamy, President, South Indian Sugar Mills Association – Tamil Nadu, expressed shock over the levy which he said makes sugar mills here less competitive in the market as compared with their counterparts in neighbouring states. This will cripple mills’ ability to pay sugarcane farmers.
At the prevailing sugar price of about ₹ 3,000 (including excise duty of ₹ 100) a quintal mills will incur an additional expense of about ₹ 150 due to VAT.
With three years of continuous drought, sugar production in Tamil Nadu has been hit while overall production has been normal in the country. This has contributed to surplus sugar flowing into the state from Maharashtra and Karnataka which do not levy purchase tax on cane or VAT on sugar. There is also no tax on interstate sales as CST is nil.
An industry source who did not want to be quoted, said the decision is a `retrograde step.’ VAT on sugar has been levied with immediate effect so mills have to shell out tax even on the sale of sugar stocks from previous seasons when they also paid Purchase Tax on the cane.
Industry estimates the stocks at about six lakh tonnes of sugar. This is a `purely revenue raising’ move that will hit the industry and the consumer, the source said.
Tamil Nadu mills will not only lose their edge domestically but also in its traditional market like Kerala, the source said.
According to SISMA estimates sugar production in Tamil Nadu in 2014-15 is estimated at about 13 lakh tonnes, just about one-third of the installed capacity as three years of deficit monsoons have hit planting.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.