Kerala planters urge State to scrap farm income tax for plantations

With the West Bengal government exempting agri-income tax for tea gardens for the next two fiscal years, Kerala planters are expecting a similar gesture, saying that various forms of taxes had already hampered the sector’s ability to re-invest.

Considering the hardship faced by the tea sector, the West Bengal government had recently abolished AIT. In South India, Tamil Nadu (in 2014) and Karnataka (in 2016-17) abolished the Act itself, but Kerala is the only State where the AIT is levied at 30 per cent, besides various other forms of taxes. Also, Kerala levies a plantation tax of ₹700/hectare.

N Dharmaraj, former President, Upasi, told

BusinessLine that the Krishnan Nair committee had studied the issue of higher taxes and suggested scrapping AIT or declare a five-year moratorium coupled with waiving of plantation tax. The tax rationalisation will encourage more investment in replanting, leading to a substantial increase in yield levels. However, levying various forms of taxes is impacting the industry’s ability to re-invest in replanting and new technology.

Kerala’s plantation industry is one of the highest taxed industries and the scrapping of various taxes is a long-pending demand of the planters’ body. The industry is one of the major contributors to the exchequer through GST, plantation tax, agriculture income tax, basic land tax, professional tax, income tax, etc.

Maintaining that the tax structure affected the sector’s ability to compete with neighbouring states, the Association of Planters of Kerala said that the move to further enhance the rates including land tax would be detrimental when prices of tea, rubber, cardamom are on the decline.

Around 7.11 lakh hectares in Kerala are covered under the plantation crops, which is nearly 27.5 per cent of the total cultivated area. The total value of production is ₹9,751 crore, which is nearly 41.82 per cent of the gross State value added by economic activity of all crops.

The sector has been passing through serious financial troubles due to higher cost of production, land related issues, lower price realisation. Planters cited low productivity of the land, labour and capital, high taxation, etc as reasons for the high production cost.

e.o.m.