Rice exempted from service tax

Vishwanath Kulkarni | | Updated on: Mar 12, 2018

rice

Finance Minister P Chidambaram, in the interim budget 2014-15, has exempted loading, unloading and storage of rice from service tax.

Rice was originally exempted from service tax as it was classified as agriculture produce.

However, the Finance Ministry later said that only paddy was agriculture produce, while rice was a processed item.

In his interim budget speech, Chidambaram said, “By virtue of the definition of ‘agricultural produce’ in Finance Act 2012, read with the Negative List, storage or warehousing of paddy was excluded from the levy of service tax. Rice was not.

The distinction is somewhat artificial. Hence, I propose to exempt loading, unloading, packing, storage and warehousing of rice from service tax”.

The Finance Minister’s decision to exempt service tax on rice comes in the wake of resistance from States such as Tamil Nadu on the Centre’s move to impose such a levy.

Tamil Nadu Chief Minister J Jayalalithaa in a recent letter to Prime Minister Manmohan Singh had urged him to “unambiguously declare rice to be agricultural produce and hence not subject to the levy of service tax for all services related with it”.

Terming it as “discriminatory and completely unjust,” against the people in South and East where rice is a staple diet, Jayalalithaa had demanded that the service tax already collected with effect from July 1, 2012, should be returned to the assessees.

Published on February 17, 2014
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