Copra trading in Tiptur hit; confusion over tax, classification

For Basavaraju, a small farmer from Halkurkepalya in Tumkur district, the ushering of GST regime on Saturday didn’t bring any cheer.

Basavaraju, who had brought eight bags (43 kg each) of copra to sell at the Tiptur APMC market on Saturday morning, had to return home without selling his produce, as traders in the market backed off from placing any bids in the last minute, citing confusion over the tax structure and classification of the produce.

As a result, the auctions did not take place on Saturday at Tiptur APMC, the largest market for the single commodity — ball copra, where the annual traded value is estimated at ₹800 crore. Auctions are held twice a week on Saturday and Wednesday at Tiptur, where traders place their bids online through the unified markets platform.

“I will take some advance from the commission agent in whose premises I have placed the copra and return on Wednesday to sell my produce,” Basavaraju said, adding he will be forced to spend more money and time next week.

So is the case of Mudappa, another farmer, who had brought his produce from a distance of around 80 km to Tiptur and some 500-odd farmers, who could not sell their produce on Saturday as confusion impacted trading. According to APMC officials, the market arrivals of copra on Saturday were about 3,530 quintals, about 3.5 per cent lower than the previous day.

“We don't have any clarity on the tax structure. As a result, no bids were placed for the copra tendered,” said Jayesh Mehta, a trader in Tiptur.

Under the GST rate schedule for goods, copra — placed under the oil seeds category — attracts a 5 per cent tax. On the other hand, products such as coconuts — fresh or dried, whether or not shelled or peeled and coconut powder are placed under the nil category in the schedule. Mehta argued that as copra is dried coconut, it should not be taxed. “There is no tax on coconut with water, coconut dried, shelled or peeled. Since we are using the word copra, it comes under the tax net. The product is the same, but taxes are different. There should be no step-motherly treatment for copra. There is a need for the government to issue a clarification,” he added.

However, the coconut growers countered Mehta’s argument and said that copra that is traded in Tiptur was different from dried coconut.

“It takes a minimum of 11 months to produce the ball copra. Farmers dry the mature coconuts for at least 11 months during which process the water in the nut gets dried naturally, lending unique sweet taste to copra. The dried nut is de-husked and de-shelled to obtain copra, which is ball shape. Hence, it is called ball copra," said Nagesh, a coconut grower.

BS Devaraju, Secretary of the Karnataka Rajya Raitha Sangha, said that a levy of five per cent was necessary on ball copra to maintain its uniqueness. “Ball copra is produced in and around Tiptur, mainly in districts such as Tumkur, Hassan and Chitradurga,” he said.

Unlike ball copra, the milling copra — which is mainly found in Tamil Nadu and Kerala — is produced by cutting the raw coconut in two pieces and drying them using artificial driers or under sunlight.

In the pre-GST regime, ball copra attracted a VAT of 2 per cent, a market fee of 1.5 per cent and commission of 2 per cent and the levies are largely passed on to the buyer. In the new regime, copra attracts 5 per cent GST, 1.5 per cent market fee and 2 per cent commission for the commission agents. “There’s also confusion on how to bill the 5 per cent tax - whether only on the value of the commodity or on the cumulative value after calculating the market fee and commission,” said another commission agent.

Moreover, the rumours of copra traders in Tamil Nadu raising their invoice on Saturday without factoring the 5 per cent GST also added to the confusion of traders in Tiptur, Mehta said. “We are trying to secure a copy of invoice from our counterparts in Tamil Nadu,” Mehta added.

Copra price, which touched a low of ₹6,500 per quintal has recovered marginally and now hovering between ₹7,800 and ₹8,100 per quintal.

“The lack of competition from buyers is influencing the prices,” said Shrikant Kelahatti of Raitha Bandhu, commission agency started by a farmers’ group. “GST will help the copra market streamline and reduce the revenue leakage to the government," Kelahatti said, making a case that copra should attract a levy of 5 per cent.

Though the initial hiccups related to transition to GST did disrupt the trading on Saturday, the APMC officials are hopeful of traders returning to the markets soon.

“We have told the traders to clarify their doubts and return to the markets by Wednesday so that the farmers are not affected," said TP Gayathri, Secretary, Tiptur APMC.

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