VAT: Odisha food item traders threaten to stop import

Protesting against the Odisha government's delay in withdrawing 5 per cent VAT on certain food items, a traders body today threatened to stop import of essential commodities like pulses, wheat and wheat products, sugar and edible oil from other states from April 1.
The Federation of All Odisha Traders' Associations (FAOTA) announced this here as the state government could not take any decision on withdrawing Value Added Tax (VAT) on certain food products. The traders' body has been demanding imposition of unitary tax instead of 5 per cent VAT on food items since a long time.
"Of the 29 states, 25 have no tax on food items. Odisha is a consuming state. Importing these items entails a freight cost of 5-7 per cent and after adding 5 per cent VAT, it becomes a cost burden of 12 per cent on the customer," said FAOTA secretary Sudhakar Panda.

Claiming that the government is also not getting the amount of revenue it should get on the basis of 5 per cent VAT, Panda said the state is getting only one-tenth of the revenue it's supposed to get.
"About 90 per cent of the revenue which should have come to government coffers is lost to unscrupulous traders. Then in whose interest is this 5 per cent VAT being levied," Panda asked, adding that their agitation is against this faulty taxation system in the state.
FAOTA had earlier threatened to stop import of such items in June 2015 following which the state government had formed a committee to resolve the issue within three months.

Now, FAOTA said, it has been forced to take the extreme step since the government failed to take any action in this matter.

Meanwhile, state Food Supplies and Consumer Welfare Minister Sanjay Dasburma said he would attend a meeting convened by the state Finance Minister to resolve the issue.
Since the unified tax system has not been implemented across the country so far, the state has imposed VAT on such food items. "We hope the traders will cooperate with the state government," Dasburma said.
The state consumes about 67,000 metric tonne of pulses and 12,000 MT of wheat products every month.