Heavy Taxes on Branded Processed Agricultural Products Have Negative Impact on Competitiveness
A report released by the Associated Chambers of Commerce and Industry has revealed that in India, the heavy taxes of over 18% imposed on "branded processed agricultural products" is having an adverse effect on the sector's competitiveness, as only about 2% of the country's fruit and vegetable produce is processed, and that worth about Rs. 50,000 every year is wasted.
ASSOCHAM also noted that the branded processed products are stamped with a 2% central sale tax, in addition to 4% local taxes including entry levies and octoroi, and all this is addition to the mandatory 12.5% VAT.
"However, unbranded products are mostly exempted or taxed at concessional rate of 4%. It acts as a disincentive for investment in the sector and affects competitiveness", said ASSOCHAM President Swati Piramal. While stressing that all food products should with "parity in terms of rate of taxes", the institution asserted that just because branded items carried the brand owner's "assurance on quality and hygiene" it was completely "unreasonable to make these more expensive by levying higher taxes".
ASSOCHAM while calling for a reasonable reduction in taxes which are levied, said that it will help generate "rural employment, ensure fair prices for farmers, reduce wastage and spread the benefits of economic growth to rural areas".
