New Delhi, April 12: Farmers’ lobbies and the NDA are miffed with West Bengal finance minister Asim Dasgupta for his proposal to bring seeds under the new tax regime.
In a recent meeting of the state finance ministers’ empowered committee on VAT here, chairman Dasgupta suggested that seeds be taxed. The National Agricultural Policy envisages exemption of seeds from all kinds of taxes and levies.
Sources said Andhra Pradesh finance minister Ramakrishnadu of the Telugu Desam objected to the suggestion. Union agriculture minister Ajit Singh’s own party, the Rashtriya Lok Dal, is opposed to the idea as seeds are a critical input in agriculture.
Ajit Singh feels the seed industry needs encouragement and a tax holiday. Speaking for his party, the minister pointed out that 95 per cent of seeds are supplied by farmers and only 10 per cent by commercial establishments. Seeds are a vital input and in the changing agricultural environment, their quality has to be improved, especially since China is giving tough competition.
Though the Indian National Lok Dal-ruled Haryana became the first state to implement VAT from April 1, the party is against taxing seeds. Another opponent of the proposal, the Indian Seeds Industries Association (ISIA) has approached the Bharatiya Kisan Sangh, a Sangh parivar affiliate. The BKS, sources said, has taken up the matter with the Prime Minister.
The National Seed Policy, 2002, had suggested several steps to promote the domestic seed industry, including “tax rebate, concessions on the expenditure incurred in in-house research and development of new varieties and other seed-related research aspects. In order to develop a competitive seed market, the states will be encouraged to remove unnecessary local taxation on sale of seeds”.
The policy also stressed on the need “to achieve better coordination between state governments to facilitate free inter-state movement of seed-planting material through exemption of duties and taxes”.
The matter is likely to come up for discussion on April 23, when the empowered committee on VAT will meet here again.
While Haryana adhered to the timetable for adoption of the VAT system, none of the other northern states plan to implement it by June 1, the new deadline.
The states that have committed to meet this deadline are: Bihar Orissa, Jharkhand and West Bengal in the east, Andhra Pradesh, Karnataka, Kerala and Tamil Nadu in the south, Goa, Gujarat, Madhya Pradesh, Chhattisgarh and Maharashtra in the West, and Assam, Meghalaya and Tripura in the Northeast.