Faced with uncertainty in the proposed Goods and Services Tax (GST) structure, bulk traders and commission agents at Agriculture Produce Marketing Committees (APMCs) in Maharashtra and Gujarat have called for a day’s shutdown on Thursday.
The traders’ concerns relate to the complex tax structure, disparity in the tax rates on raw and packaged agriculture produces, multiple tax incidence under mandi tax and fears of rising financial liability in case of a default by the pre-seller. “Most raw agro produces are exempt from GST, but the same commodity, when cleaned and labeled, attracts 5 per cent or even 12 per cent GST. There is a lot of ambiguity in the tax structure,” said a leading trader from Vashi APMC in Mumbai, seeking anonymity.
Similarly, loose groundnut will be GST-exempt, but packed and labelled groundnut will be taxed at 5 per cent.
Confused, traders have decided to scale back their trading as the July 1 date for GST implementation draws near, fearing a disruption in the movement of goods after June 25. Traders and merchants at mandis in Maharashtra’s Vidarbha region, Mumbai and Pune joined their counterparts in Saurashtra, Gujarat, in calling for a ‘mandi bandh’ on Thursday, which will bringtrading in commodities to a halt. Traders in other parts of the country are unlikely to join the bandh call.
The Navi Mumbai Merchants’ Association wrote to 14 affiliate APMCs and markets to observe the bandh. Association chairman Kirit Rana claimed that nearly all 300 APMCs in Maharashtra will observe the bandh. “The ‘one-nation, one-tax’ claim isn’t being realised by the GST, and even after July 1 we will have to pay mandi tax. Second, the liability of a pre-seller default will prove disastrous for traders,” said Rana.
Bombay Sugar Merchants’ Association Secretary Mukesh Kuwadia told BusinessLine that the GST implementation modalities place a lot of liabilities on traders who purchase sugar from the mills. The association had wanted sugar used for domestic consumption to be kept out of GST ambit as it accounted for only 35 per cent of total sale. The rest is used by pharmaceutical, confectionery and other industrial users. The association noted that the one-time tariff of ₹71 per 100 kg of sugar charged at mill gates as excise duty works out to 2 per cent of the price of sugar. “The proposed 5 per cent GST on sugar may increase the landed price, which may impact household consumption,” it said.
“Secondly, it will be disastrous for the fraternity to take the liability of the pre-seller defaulting on payment of GST as the margins are hair-thin,” the association said in a letter to the Finance Minister.