Industry & Economy
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Food & Dairy Products
Biscuit industry opposes VAT
Our Bureau
New Delhi
,
March 24
THE Federation of Biscuit Manufacturers of India (FBMI) has threatened a week-long strike to oppose the value-added tax (VAT) regime slated to become operational from April 1.
Speaking to newspersons, the President, Mr B.P. Agarwal, said that the industry was seeking four per cent VAT against the higher rate of 12.5 per cent which has been fixed for biscuits since this is an agro-based product, consumed by the common man.
"We do not oppose VAT. The Government had first promised to abolish other levies such as sales tax, mandi tax, octroi etc. and then implement VAT, but now the situation has changed. VAT over and above the previous taxes will result in closure of a large part of the industry," he added.
While sweets, namkeens, bread and chips have been exempted from the tax, biscuit has been considered as a high profile industry and included in the tax slab of 12.5 per cent, same as that of luxury items, cosmetics and toiletries, he added.
Players in this Rs 4,000-crore industry are already battling steep escalation of up to 30 per cent in the input cost of major ingredients this fiscal, he said.
Also, the average utilisation of installed capacity by biscuit manufacturers in the country has been only 60 per cent over the last decade.
Acknowledging that the Federation had dropped its earlier demand of bringing biscuits under the excise-free items list, Mr Agarwal said that the industry should now be categorised in the lower 4 per cent VAT slab for it to remain viable.
The biscuit industry claims to be paying as much as 30 per cent tax on the finished product and is growing annually at 15 per cent.
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