Manufacturers demand 4 per cent VAT on biscuits in UP

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Lucknow, Jan 10: Indian Biscuits Manufacturers Association (IBMA) today urged Uttar Pradesh chief minister Mayawati to reduce the Value Added Tax (VAT) on buscuit from 12.5 per cent to four per cent as the hike was creating losses to the industry and trade in the state.

The members of the association also met the senior officials of the UP government to impress upon them to reduce the rate of VAT implemented in the state from January 1. A memorandum has also been sent to the chief minister on the issue. However, the rate of VAT on biscuit in other states adjoining UP like Delhi, Haryana, Bihar, Jharkhand, Rajasthan and Uttarachand was 12.5 per cent.

Addressing a press conference, IBMA president B P Agarwal said that biscuit is a healthy nutritious snack food hygienically processed and packaged. ''available at very reasonable prices and consumed predominantly by children,besides the economically weaker sections of the society uses it as a staple diet'', he claimed.

Mr Agarwal, chairman and managing director of the Surya Foods and Agro Limited- Manufacturers of Priyagold buscuits, said when food products like Jams, Jellies, Potato chips, Ice Cream which do not have any nutritional value are either exempted or leived VAT at four per cent, then why biscuit is being taxed at the rate of 12.5 per cent.

''Even luxury item like dry fruits is being charged at four per cent under VAT but common man's healthy nutritious food buscuit is being taxed heavily'', he said.

He claimed that if the rate of VAT on biscuit is reduced to four per cent then the production will grow by 25 per cent annually which will compensate the revenue of the government.

Commenting on the similar 12.5 per cent tax on biscuits in other states the Association president said that they are talking with other state governments over the issue.

At present about 60 biscuit manufacturing units of UP, with an annual turnover of Rs 200 crore, have been affected with the recent hike under VAT which was earlier eight per cent under trade tax regime.

Mr Agarwal said that the state government had already scrapped compuding tax system for the small entrepeneurs leading to further problems for the biscuit manufacturers.


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