Reduce VAT to 4 pc on biscuits: IBMA

New Delhi, May 9 (UNI) Value Added Tax (VAT) at the rate of 12.5 per cent on biscuit has resulted in low demand pick-up and subsequent losses to the biscuit industry.

''The sector has been hit hard, especially the small and medium segment,'' said President, India Biscuits Manufacturers Associatioin (IBMA) B P Agarwal.

''The association has submitted representations to the Chief Ministers, Finance Ministers of all state governments, and also to Chairman, Empowered Committee on VAT Asim Dasgupta, with the plea to reduce the rate of VAT on biscuits to four per cent'' added Mr Agarwal.

Biscuit is a nutritious snack food hygienically processed and packaged. Available at very reasonable prices and consumed predominantly by children and economically weaker sections of the society, fiscal policies should be accordingly tailored to ensure greater consumption of these goods among the low-income group, he added.

Stating it would have ripple effects, IBMA chief said higher consumption of processed food including biscuits will lead to greater demand for agro products, like wheat, vegetable oil, sugar milk, etc. Thus, growth in production and consumption of biscuits would benefit the farmers of these agro products.

However, sharp increase in the prices of wheat, vegetable oil sugar etc has already hiked up the cost of production coupled with various local levies, such as Purchase Tax, Entry Tax, Octroi etc.

Recognising the need to encourage bisuit manufacturing, the state of Tamil Nadu, which has recently introduced VAT, has fixed rate of 4 per cent on biscuits. Similarly Assam is also levying VAT at 4 per cent on biscuits,'' mentioned Mr Agarwal.

He urged other state governments to consider IBMA's representation for fixing 4 per cent VAT on biscuit.

''Biscuit industry directly and indirectly employs more than 25 lakh workers, and therefore, deserves sympathetic consideration by the state governments, especially with regard to levy of VAT,'' justifies Mr Agarwal.

UNI