MP waives tax on tractors bought during 1995-2000

State has more than 200,000 tractors; industry is growing at 13.8%

The MP government today decided to exempt tax on tractors, trailers and "dumper trucks" purchased during the period 1995-2000.

During a discussion on "Madhya Pradesh Motor Karadhan (Samshodan) Vidheyak 2005" tabled in the assembly today, Chief Minister Shivraj Singh said: "I belong to a farmer's family and I know their problems. The tax at 1 per cent will put farmers under greater financial strain," he said.

The state has more than 200,000 tractors and the industry is growing by 13.8 per cent, according to the National Bank for Agriculture and Rural Development (Nabard). However the chief minister did not say if the tax would be levied on the newly purchased tractors.

Transport Minister Himmat Kothari said tax at 10 per cent of the total cost as life-time tax would be levied on small trucks and dumper trucks with a 2-tonne load capacity.

He also said taxis in the state would pay Rs 150 every quarter. This relaxation is because unemployed people run taxis under various government-sponsored loan schemes. But neither minister disclosed the financial burden on the government.

With its 11 agri-climatic zones, the state has a variety of soils, but a larger chunk of the land is fit for growing black cotton and demands comparatively low horse-power tractors (25-35 HP).

Reacting to the decision, a tractor industry source said, "The decision will apply only to old tractor-owners and not new purchases; this is a heavily taxed industry.

The state had earlier decided to do away with the subsidy offered on 25HP tractors because bankers were financing them.

"Most of the banks fund low-horse power tractors that only small farmers purchase. Tractor remains ideal during most of the time in a year; small farmers lose their lands to bank in absence of proper return from a tractor in the state. In number of cases either small farmers have become marginal farmers or labourers since they failed to repay loans on tractors," a senior banker told Business Standard adding, "the decision will boost old-tractors' sale to a certain extent."