Maharashtra co-op sugar mills take up tax case of contractors

Cooperative sugar mills in Maharashtra have appealed to the Union finance ministry to stop the insistence on tax deduction at source on the income of cane harvesting and transport contractors.

The Federation of Cooperative Sugar Mills in Maharashtra says the income tax authorities refuse to recognise that these labour contractors don’t even have PAN cards and were earlier exempted from the tax deduction at source (TDS) rule. It has asked the ministry to intervene and get a ‘No TDS’ certificate to these people.

Federation sources told Business Standard these contractors, who play a major role during the crushing season, keep moving from one area to another every year. Their net annual margin is not more than Rs 40-50,000. “During the season, they have been paid advances to enable them to make payments to the labourers.” About 800,000 labourers were employed in the rural areas during this crushing season.

In ther absence of a PAN number, the tax authorities were refusing to issue the ‘No TDS’ certificate, went their representation. Income tax sources declined to comment.

On recovery of income tax from sugar mills, the federation has asked the ministry for a ruling that the cane price as determined by the state government and paid in accordance with the latter’s directions be allowed as revenue expenditure. The Federation argued part of the sugarcane price was compulsorily spent for social welfare objectives and for agricultural development in inaccessible rural areas.