Refund Excise Duty and VAT: CICU

Ludhiana, September 26, 2012: Upkar Singh Joint Secretary Chamber of Industrial and Commercial Undertakings (CICU) in a statement issued today said that need of the hour is to bring farm mechanisation in agriculture sector. 

In a statement here today, he added one of the factors which accelerate cost of machinery is Central Excise Duty and State VAT. In the present scenario, the concern of millions of farmers is to achieve sustainable produce. Value addition for them is very low and they are passing through vicious circle of low profit due to low investment in technology and shortage of labor which are proving to be counterproductive for their growth and development.

Adding, he said they have to cope with changing time by adopting new technology to emerge as growth engines of the agricultural economy. “If we compare them with developed countries there is a huge gap for usage of new technology which needs to be addressed on priority basis”, he said.

Further, he said although there is no VAT and Central Excise Duty on agricultural machinery yet both these taxes are payable on 70-80% of raw materials which is used for its manufacturing.

Citing examples, he said agriculture machinery of Rs.50,000 comprising of 70% raw-materials costing Rs. 35,000 for which Central Excise Duty and State VAT of Rs.6,059 comes to be payable. “By this way, farm machinery is being indirectly taxed making it a costly proposition for adoption by farmers”, he remarked.

He opined that easy availability of low cost agricultural machinery will make enormous contribution to revitalise and encourage farmers to enhance productivity by adopting cheap and innovative technologies. To achieve this goal and also to solve the problem of labor shortage, there is urgent need to provide low cost raw material to agricultural manufacturing industry.

He said, “This support will encourage manufacturing companies to plan adequate marketing strategies to reach out to farmers for use of low cost affordable machinery to produce efficiently and reap more profits.”

He urge upon Central and Punjab Governments to refund Central Excise Duty and VAT on raw material used for manufacturing agricultural machinery. This gesture will lead to availability of agricultural machinery at nominal cost to farmers which will greatly help them to opt for mechanisation and address the issue of food shortage as well, he said.