International Nuts and Dry Fruit Council (INC) said that the industry currently pays 5 per cent VAT in most states and therefore, goods and services tax (GST), should be at the same level.
Already, dry fruits attract very high customs duty of up to 30 per cent.
"Any increase in GST will be at the cost of national interest," INC Ambassador for India Raju Bhatia told PTI.
The National Investigation Agency is also aware of these illegal trades and the issue has been flagged with Finance Minister Arun Jaitley recently, he added.
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Almond, pistachio and walnut are main dry fruits exported from J&K via LoC.
"These dry fruits are not grown in Kashmir. They are imported from Iran and the US and misrepresented as Kashmir commodities and sold via LoC. In fact, Kashmir's production of these dry fruits is very low and consumed locally," he shared.