Lower VAT on biscuits demanded

Indore, May 2 (UNI) The Rs 9,500 crore-biscuit industry has sought reduction in Value Added Tax on biscuits from 12.5 per cent to four per cent saying the industry was suffering huge loss due to heavy taxation.

Biscuit Manufacturer's Welfare Association (BMA) Chairperson Mary Aiyer and spokesperson Rajesh Jain told reporters here that a memorandum had been submitted to the Madhya Pradesh Government to reduce VAT for cheap biscuits -- priced upto Rs 75 per kg.

Barring Assam and Tamil Nadu, 12.5 per cent VAT on biscuits was applicable in all states.

Besides Madhya Pradesh, the BMA had requested the state governments of Gujarat, Rajasthan, New Delhi, Andhra Pradesh, West Bengal and Maharashtra for lowering VAT.

The Andhra Pradesh Government has rejected the BMA's demand.

Ms Aiyer said the Centre had exempted biscuits priced up to Rs 50 per kg from custom duty. Industries expected to get relief from the states also.

The BMA claimed that the biscuit industry witnessed sales of mostly glucose, marie, basic cream and milk biscuits, which were consumed by labourers, truck workers and other poor sections.

In this view, biscuit manufactures had not raised prices of such biscuits since the past 11 years despite growing prices of ingredients, including wheat, sugar and oil.

Low-cost manufacturing procedure, packing and transportation had been deployed in this regard.

Under these circumstances, higher taxes proved to be a double whammy for producers.

Failure in reducing tax could result in higher prices making it unbearable for consumers, who would be forced to switch over to alternatives in unorganised sector by compromising quality.

The BMA claimed that the biscuit industry was the biggest consumer of agri-products. However, manufactures were not getting the benefits of food-processing industry.

Indore-based M B Bakers's Jadish Badlani said 70,000 tonne of glucose, marie and other biscuits were consumed in Madhya Pradesh.

Eight per cent of biscuits sold in the state were cheap biscuits.

UNI