The Haryana government on Friday announced a reduction in market fees it levies on trading taking place inside market yards to 2 per cent from 2.5 per cent for paddy if sold at ₹2,500/quintal or below. The new market fee for paddy sold above ₹2,500 will be charged at ₹50/quintal (fixed).

In a notification issued on October 7, the Haryana State Agricultural Marketing Board said the new fee will be charged for paddy irrespective of the variety. As Basmati paddy is sold above ₹3,000 per quintal this year, the effective rate will be ₹50/quintal, whereas earlier traders and exporters were charged at 2.5 per cent (which was totalled ₹75 for buying at ₹3,000/quintal).

Haryana had increased market fees on basmati paddy from 0.5 per cent to 2 per cent from June 22 last year and that of rural development cess also to 2 per cent from 0.5 per cent from January this year. The Haryana Rice Exporters Association (HREA) wanted the market fees on Basmati paddy to be cut to 1 per cent and the RD cess to 0.50 per cent.

At par with nearby States

Citing Haryana has the highest taxes levied on Basmati paddy, exporters had sought a reduction in mandi and other assorted fees from the current 6.5 per cent to make it at par with neighbouring States so that farmers get better prices.

In a letter to the State Chief Minister in July, HREA president Sushil Jain said Kachi Aadhat/Dami (commission charged by commission agents), market fees and rural development cess put together make Haryana top in taxes compared to other States. Moreover, Punjab, Uttaranchal, and Uttar Pradesh have made market fees and RD cess refundable on export. Besides, power tariffs, labour charges and other expenses are already higher in Haryana than in nearby States, said Jain.

Haryana is one of the few States that supported the Centre’s three farm laws, which got repealed last year after being in operation for nearly 18 months. But, direct purchases from farmers were not happening in Haryana after the Supreme Court’s stay in 2021, unlike Rajasthan, Uttar Pradesh and Madhya Pradesh, which were liberal in the enforcement of mandi laws.

‘Discriminatory’

The HREA president said different fees in different states is discriminatory and is against the policy of the Centre. India’s biggest tax reform - Goods and Services Tax - was introduced by the Centre with the main objective of ‘One Nation One Tax’ which suggests that everyone shall bear the same rate of taxation on the same commodity, he said.

“For the same services, every State is charging different rates of market fees and cess and different rates of commission for commission agents. It is a great injustice to the farmers as their selling prices have to factor in what is the buying price of traders in other States. If Basmati paddy costs a trader ₹4,100 per quintal in one State, he will not buy at a higher rate from a neighbouring State and ultimately pass on the burden of higher taxes on the farmers by paying them lower,” Vijay Setia, a former president of All India Rice Exporters Association said.

Setia said this is the first step in reducing the burden on farmers and his efforts will continue until the government rationalises the tax structure by addressing the other two aspects—rural development cess and arhtiya commission.

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