Entry tax would esclate sugar prices in Punjab

Phagwara, Nov 25 (UNI) Sugar will no more be as sweet in the border state, as the imposition of 4 per cent entry tax on this essential commodity would esclate the price, which is currently hovering at around Rs 16 per kg.

Sugar brought from outside Punjab, which was a tax free good (Schedule A) until now, has now been made taxable by the state government.

The government has imposed additional tax at the rate of four per cent on sugar not manufactured in Punjab, besides covering it under the entry tax. Clearly this would result in rise in sugar prices.

Earlier sale of sugar within the state as well as outside the state had been tax free.

Keeping in view of the continuing dismal VAT collections in the first two quarters of the current financial year and to secure more revenue, the state government had revived the Punjab Tax on Entry of Goods into Local Areas Act, 2000 with effect from November 21.

Commenting upon the state government's decision on ''Entry Tax'', Mr Vinod Vashishat, an expert on VAT said here today that the move is clearly aimed at protecting the sugar industry in Punjab, at the cost of the consumer.

The government has imposed four per cent entry tax on certain goods, that is iron and steel, dyes and chemicals, all types of yarn and sugar from November 21 onwards. Besides this the government had made the entry tax vatable in line with the decision of the Empowered Committee of the state Finance Ministers on VAT.

Except sugar, applicable local tax (VAT) on the goods covered under entry tax is four per cent, which means that in most of the cases, the entry tax imposed at the Information Collection Centres would get adjusted in the subsequent tax liability.

Mr Vashishat further said that while the rationale for bringing entry tax back on goods other than sugar can be understood to be putting a curb of tax evasion, there is no reason why sugar has been taxed, except one to protect the local inefficient sugar industry of the state.

Its a known fact that sugar manufactured locally was not able to sell well both in Punjab as well as outside the state on account of quality and cost factors. However sugar from outside the state was sold at affordable prices here.

So imposing tax on sugar not manufactured in Punjab would amount to providing subsidy to the local uncompetitive sugar industry, Mr Vashishat added. Sugar is a product used by one and all and falls under Declared Goods under 'Goods of Special Importance' under the CST Act, 1956 as well as under Additional Excise Duty (AED) goods 'First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957.

The White Paper on VAT as brought out by the Empowered Committee (EC) of State Finance Ministers on VAT had declared that VAT on AED items will not be imposed and any imposition of VAT on AED items would be reviewed by the EC forum.

UNI