By Ankush Chibber, 15-Mar-2012
A similar demand was made in November last year by the All India Food Processors' Association (AIFPA), which complained of logistical issues caused by VAT differences between states and called for a uniform rate across borders.
India’s food and beverage processing industry is hoping for some tax respite from the fiscal budget for 2012-13, but indications are that is unlikely to occur.
Industry groups like the Federation of Indian Chambers of Commerce and Industry (FICCI) have asked for the 10% central value-added tax (VAT) to be reduced to 0% for many food items.
A similar demand was made in November last year by the All India Food Processors' Association (AIFPA), which complained of logistical issues caused by VAT differences between states and called for a uniform rate across borders.
Nadia Chauhan, joint managing director at Mumbai-based Parle Agro also rued the fact that although primary agricultural commodities enjoy tax exemptions, processed foods are subject to multiple levies.
“The goods and services tax [GST] does provide a hope to rationalise and simplify the tax structure,” she said, referring to the same tax under another name.
The GST is a value added tax to be implemented by April 2012. It will replace all indirect taxes levied on goods and services by the Indian Central and State governments. It is aimed at being comprehensive for most goods and services with few tax exemptions.
GST may not be the answer
However, if the pre-Budget Economic Survey report of the Economic Advisory Council to the Prime Minister were anything to go by, the GST would not be the savior food processors have been hoping for.
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