Odisha to pitch for uniform VAT rate on wheat, pulses

The state government will demand fixation of uniform VAT (value added tax) rate on pulses, wheat and wheat products for all states at the upcoming meet of the empowered committee of state finance ministers to be held on May 7-8.

"We feel that there should be a uniform VAT rate on pulses, wheat and wheat products for all states. Our finance minister will raise this demand and press for discussion on this matter at the ensuing meeting of the empowered committee of state finance ministers. The minister is also writing to the chairman of the empowered committee to include this issue in the agenda of the meeting," said an official source.

"VAT rate needs to be uniform across the country for the convenience of consumers and traders," he added.

It may be noted that last month, traders had resorted to a week-long stir and had stopped imports of wheat, wheat products and pulses over non-fulfilment of their demand for withdrawal of VAT on these food products.

But, the finance department had ruled out a VAT waiver, citing such a decision cannot be taken unilaterally by the state government.

Odisha was levying VAT at the rate of five per cent on these commodities as per the recommendations of the empowered committee.

Total annual consumption of dal in the state comes to 755,920 tonne valued at Rs 4,500 crore. As per traders' estimates, five per cent VAT should fetch Rs 225 crore for the state government every year. However, the realisation was much lower at Rs 40 crore in 2013-14

The government is considering a proposal to slash VAT on these products. A committee is to be formed with representatives from the traders' body and officials from the departments of food supplies, labour, finance and MSME (micro, small & medium enterprises) to study the impact of VAT reduction. The committee will submit its report within three months.