The agitating traders under the banner of Odisha Byabasayee Mahasangha today decided to call off their strike and renew imports of pulses, wheat and wheat products from Tuesday after fruitful negotiations with the state government.
Traders had halted imports of these products from other states since April 9 protesting collection of VAT (value added tax) on these food items at the rate of five per cent. Instead, the traders had pleaded that either VAT should be brought down to one per cent or it should be completely abolished and replaced by one per cent entry tax.
"The state government cannot accede to the traders' demand of levy of entry tax on pulses and wheat since the matter is sub-judice with the Supreme Court. But we are considering a proposal to slash VAT on these products. A committee will be formed with representatives from the traders' body and officials from the departments of food supplies, labour, finance and MSME (micro, small & medium enterprises) to study the impact of VAT reduction. The committee will submit its report within three months. Thereafter, we can take a call on cutting VAT," said M Padhee, secretary, food supplies & consumer welfare.
Total annual consumption of dal in the state comes to 755,920 tonne valued at Rs 4,500 crore. As per traders' estimates, five per cent VAT can fetch the state Rs 226 crore but the government is actually getting Rs 40 crore every year.
Should one per cent VAT or entry tax be levied, instead of five per cent VAT, the unscrupulous traders will lose the incentive to import the food products through back channels to avoid paying tax and the better tax compliance would actually boost the revenue collection, the Odisha Byabasayee Mahasangha reasoned.
However, the state finance department had ruled out the possibility of levy of entry tax, stating the matter was sub-judice. It also held that five per cent VAT was imposed on pulses, wheat and wheat products as per the recommendations of the empowered committee of state finance ministers.
Last Friday, state finance minister Pradip Amat wrote to the empowered committee to convene a meeting of all states to deliberate on a uniform tax rate for dal, pulses, wheat products and other agriculture products.
