Traders’ report card gives thumbs down to Vat
Traders’ report card gives thumbs down to Vat
In an attempt to boost the per capita consumption of biscuits in the country, the biscuit industry has asked for duty waivers and reductions in the tax levels applicable to it. Currently, biscuits are subject to 8 per cent excise duty and a 12.5 per cent value added tax (VAT).
Reduction in VAT levels: The industry has been lobbying with the Government to reduce the VAT levels from 12.5 per cent to 4 per cent claiming that the imposition of VAT has affected the biscuit manufacturers in the country and has consequently resulted in several biscuit units shutting down.
According to B.P. Agarwal, President, Federation of Biscuit Manufacturers of India (FMBI) and Chairman, Surya Agro and Food Ltd, “the imposition of VAT has increased the idle capacity of biscuit units to almost 50 per cent.”
It has been argued that biscuit being a highly price sensitive low margin product, the industry cannot pass on the VAT to the consumers and at the same time is unable to absorb the cost escalation.
Agarwal further pointed out that other snack foods such as potato chips, jams and jellies, attract a lower rate of the VAT, while biscuits are subject to 12.5 per cent VAT.
More: sify.com