Odisha traders want waiver of VAT on pulses, wheat products

Traders in the state have threatened to go on stir if the state government fails to withdraw five per cent VAT (value added tax) on sales of pulses, wheat and wheat products by August end.

"Odisha being a consuming state, VAT on flour, suji, maida and pulses should not be levied. The levy is not there in 23 states of the country," Sudhakar Panda, secretary of the Odisha Traders' Association told media persons on the side line of launching of fortified wheat flour by Shree Jagannath Flour Mills and Subhalaxmi Industries in association with Global Alliance for Improved Nutrition (GAIN) and Roller Flour Millers Federation of India (RFMFI).

Consumption of pulses in the state stood at about nine lakh tonnes with a business turnover of about Rs 4,500 crore. Odisha manages to produce only 10 per cent of the total demand.

State government collects about Rs 30 crore VAT on pulses against the target of Rs 225 crore due to unfair business practices adopted by the traders, he added.

Traders said, five per cent VAT is making the price of food items less competitive compared to their counterparts in other states resulting in rise of unfair practices to avoid the levy. In pulses alone the price difference comes to about Rs 300 per quintal.

Instead of VAT, the state government can levy one per cent entry tax, which would earn it about Rs 50 crore per annum, Panda said.

"The association has taken up the matter with the government many times. If no corrective measure is taken by the government by August end, we will take a final call on the issue. We may even go for strike," he warned.

Flour mills generally depend on Bihar and West Bengal for procurement of wheat. Due to non- viability, only 20 mills out of 50 mills in the state are in operation, said a miller. State consumes about three lakh tonne of wheat and wheat products.

With the imposition of one per cent of entry tax and removal of VAT, the state can earn more revenues as the neigbouring states are relying on Andhra Pradesh and West Bengal ports for import of pulses, traders said.

India imports about Rs 80,000 crore worth of pulses annually.