Concessions buoy seafood exporters

Recent concessions extended by the state government on purchase tax and on agricultural market cess have come as a relief to the state's seafood exporters.

The concessions include an exemption of the four per cent purchase tax and the cancellation of the agricultural market cess (AMC) on shrimp and prawn purchase by exporters.

The government has replaced the AMC with the infrastructure development fund tax of 0.5 per cent on total export value.

Three years ago, the state government had introduced a four per cent purchase tax on shrimp and prawn purchases by the seafood exporters.

Every year, seafood exporters in the state have been purchasing around Rs 1,500-1,600 crore worth of shrimp and prawns from the farmers.

On this, the government had imposed a purchase tax . After representations from the seafood exporters association, the government agreed to exempt this purchase tax for those who were purchasing prawn/shrimp for export purpose only.

To avail the tax exemption, the exporters had to submit the export order copy before purchasing the material.

But this clause delayed shrimp shipments as previously the exporters used to purchase the shrimp stocks in anticipation of export orders and used to export the material within a week of getting the export order.

In order to avail the tax benefit, seafood exporters started purchasing the material only after getting the export orders.

Normally, it takes around 20 days to procure one ship consignment of shrimp and another 10-15 days for processing and other formalities. Therefore, there was a minimum of 35-30 days delay in shipment due to the clause, seafood exporters said.

The government via a government order in February had exempted purchase tax on shrimp/ prawn for exporters, retrospectively with effect from January 2000.

"We are happy with this order. Now, without showing any export order copies, exporters or their agents can purchase prawn/shrimp from farmers and that too without paying any tax," Ch Kishore Kumar, vice-president of the Seafood Exporters Association of India (SEAI), AP Region, told Business Standard.

In addition to this, the state government has also cancelled the agricultural market cess (AMC) on shrimp/prawn purchase by exporters and in its place the government introduced the infrastructure development fund tax of 0.5 per cent on total export value.

At present, the exporters pay an AMC of 0.5 per cent on the value of purchased material.

"The shrimp exporters are being harassed by checkpost staff seeking bribes. Refusal to pay up would mean delay for the shrimp loaded vehicles, some times more than 15 hours, to reach the processing plants. This delay can be very traumatising due to the highly perishable nature of the shrimps. Now the government has finally understand our problem and removed the AMC on shrimp/prawn purchase," he said.

"The development fund tax on total export value is slightly more than the AMC on purchased material. But we are happy with the state government's decision as this removes the harassment by government staff in different levels," Kumar said.