Cotton ginners call for tax reduction in Punjab

Ginners say that lower taxes in neighbouring Rajasthan and Haryana encourage farmers to sell their produce there

Cotton ginning factories in Punjab are languishing due to higher and multiple taxation. Talking to media in Chandigarh on Monday, members of the Punjab Cotton Factories and Ginners Association said that the rate of taxes in neighbouring states of Rajasthan and Haryana was lower than Punjab’s, which encouraged farmers to sell their produce in these states. As a result, Punjab’s ginning factories were running below capacity.

According to Bahgwan Bansal, the association’s president, said that factories were lying idle in Punjab. He also said that the number of ginning mills had also decreased in Punjab from 411 to 327 in the past few years as ginners had relocated themselves ton Sirsa, Dabwali, Tatia in Haryana and Ganga Nagar, Sangria and Motilu in Rajasthan.

The ginners contended that the Centre has reduced the central sales tax (CST) to 2 per cent but in Punjab, the state government did not refund the CST charged over and above 2 per cent. "This results in a loss of Rs 150 to Rs 200 per quintal", Bansal added.

He said that due to tax advantages in other sates, about 6 lakh bales of cotton (one bale = 170 kilogram) is sold out of Punjab every year.

The association also wants a dry port to be created at Bhatinda to facilitate the export of cotton yarn. "In order to create an interface between the industry and farmers, the state government should arrange events in the Bhatinda belt," he added.

The ginning industry contributes about Rs 100 crore per annum in the form of market fee to the state exchequer.

A pro-active approach by the state government would not only raise the revenue but create better employment opportunities for the youth of the state, the association added.