Financial Daily from THE HINDU group of publications
Monday, Sep 09, 2002
Financial Daily from THE HINDU group of publications Monday, Sep 09, 2002 |
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Agri-Biz & Commodities
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Coffee Coffee Board panel moots deletion of IT notification M.R. Subramani
CHENNAI, Sept. 8 A TASK force set up by the Coffee Board has urged the Centre to delete section 7B of the Income Tax Rules, 1962, which stipulates that 25 per cent of the income from the sales of coffee grown and cured by growers will be computed as derived from business. "This will save the hardship that over 1.5 lakh growers will have to face. The task force recommendation has been sent to the Commerce Ministry for further action," plantation industry sources told Business Line. On June 19, the Central Board of Direct Taxes (CBDT) issued a notification stating that under the 11th amendment of the Income Tax Rules, income from sale of coffee grown and cured would be liable to tax. Following protests from small growers, the Coffee Board set up a task force to look into the issue. The task force, which studied the issue in detail, submitted its report a fortnight ago. "Now, the question is how to rope in big growers under the Income Tax Rules. If the Government wants, let it introduce another legislation," the sources said. Coffee planters, especially small planters, had objected to the CBDT notification as they felt they would have to "needlessly do cumbersome paper work". CBDT was also told by the planters that it will be flooded with papers but without any return. The notification was a fall-out of a Supreme Court ruling in the Aspinwall & Co case that dehusking of coffee was "manufacturing of coffee bean". The notification has also stipulated that those who roast and ground coffee besides curing will be liable to 40 per cent income tax. The plantation industry is of the view that large growers are already filing their income tax returns under the one-in-six scheme and this is enough to ensure compliance in payment. Meanwhile, rains since the second half of August are seen helping the coffee crop. According to Mr Bose Mandanna, Vice-Chairman, Coffee Board, rainfall shortage was 40-60 per cent but the rains had pruned it to 15-20 per cent. "The entire Kodagu region has had a good rainfall. This means we will be nearer the expected output," he said. During the 2002-03 crop year starting October, the production is projected to be 2.8 lakh tonnes, 20 tonnes less than the current year. Of this robusta is expected to make up 1.74 lakh tonnes and arabica the rest. However, Mr Mandanna said that while robusta production was likely to be as expected, arabica could be hit due to white stem borer attack. "Crop inputs have been poor due to low prices. This too will take its toll on the crop," he said. Still, the industry sees a ray of hope in Brazil's effort to take some 8 million 60-kg bags off the market under a 690-million reais ($222 million) storage aid programme. It has also introduced a CPR scheme allowing coffee farmers to sell next year's crop in advance and lock in prices, passing on the financial risk to traders who hedge their positions on futures markets.
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