Soya industry gets VAT breather in MP

Soya industry has now more room to breathe in domestic market as the Madhya Pradesh government today exempted de-oiled cake (DoC) from value added tax.

The domestic soya crushing units will be given full input tax rebate on de-oiled cake, though Madhya Pradesh hardly has any share in Indian de-oiled cake market.

The entire state production of de-oiled cake roughly at 36-40 lakh tonnes per annum goes to international market.

Soyabean Processors Association (Sopa) said the state would now be able to participate and compete with the industries of neighbouring states like Maharashtra and Rajasthan.

“We had a long-pending demand of full input tax rebate as it was tough to compete in the domestic market as neighbouring states do not levy any tax. The decision will boost participation in domestic market. We welcome this step of rationalising the taxation system,” said Rajesh Agrawal, Sopa spokesperson.

At present soya crushing units, more than 70 in number, pay 7.5% tax that includes 2.2% mandi tax and 1% entry tax on both seed and oil. “In fact, there were losses to soya crushing units. A number of units had been either closed or the workers had migrated to neighbouring states like Maharashtra and Rajasthan due to growing tax evasion incidences. Moreover, this decision will boost prospects of raw material availability for soya de-oiled cake units,” a government spokesperson said confirming the report of this decision, which was taken by the state Cabinet today.

However, Agrawal said the industry wants to abrogate entry tax and mandi tax to make the industry viable as crushing capacity is just double of total seed production.

The state produces 50-60 lakh tonnes of soya and has combined crushing capacity of 125 lakh tonnes.

DoC prices are hovering around Rs 18,500 per tonne in the domestic market.