Rice stocks gain on relief in service tax

Shares of rice manufacturers today rose by as much as 5% after Finance Minister P Chidambram gave some relief in service tax for rice warehousing and storage.

 

Chaman Lal Setia Exports' scrip surged 4.60%, while KRBL rose by 1.32% and Usher Agro gained 0.29% on the BSE.

 

The Finance Minister today announced service tax would be abolished on rice from the staple's loading to storage stage.

 

Rice was originally exempt from service tax. However, later the Finance Ministry had said that only paddy is agri-produce, while rice is a processed item.

 

Presenting the interim budget for 2014-15 fiscal, Chidambram said: "By virtue of the definition of 'agricultural produce' in Finance Act 2012, read with the Negative List, storage or warehousing of paddy was excluded from the levy of service tax. Rice was not.

 

"The distinction is somewhat artificial. Hence, I propose to exempt loading, unloading, packing, storage and warehousing of rice from service tax.