Gujarat salt makers on stir

VAT THE IMPACT

Salt manufacturers of Gandhidham plan to stop rake loading from April 7 "" the day the re-enacted Dandi March ends. The Gujarat town contributes 40 per cent of the country's salt production.

Since Independence, salt has been exempted from sales tax. It is ironic that tax on salt is being introduced when the country is celebrating the 75th anniversary of Mahatma Gandhis historic protest against the British for taxes on salt.

Prime Minister Manmohan Singh and Congress President Sonia Gandhi are expected to be present at Dandi when the processionists re-enact Gandhis symbolic defiance of the salt tax.

There is little symbolic about the manufacturers protest though. "Salt is considered an essential commodity and I feel salt should not be taxed. We urge the Prime Minister to reconsider the 4 per cent sales tax being levied in the name of VAT," Hiralal Parekh, president of the Indian Association of Salt Manufacturers (ISMA) told Business Standard.

The salt makers of Gandhidham load about 5,000 tonnes of salt worth Rs 1 crore every day and the impact of the strike will be felt in real terms.

The empowered committee of finance ministers on VAT had set April 1 as the deadline for all states to switch ti the new tax regime. The salt manufacturers of Gandhidham opposed the decision, saying that people from lower income groups were engaged in the business.

Moreover, they argue that more than 80 per cent of the total edible salt production was contributed by small and medium-scale salt manufacturers.

"The Centre is charging Rs 3.50 per tonne while we have to pay Rs 8 per tonne to the state government as royalty. I feel VAT implementation, along with the other taxes, will come as an extra burden for small-and medium-scale salt manufacturers," said Parasmal Nahata, vice-president of Gandhidham Chamber of Commerce.

In the last financial year, Gandhidham contributed 45 lakh tonnes of non-refined salt, almost doubling the previous years production, owing to demand from China and Japan.

"Imposition of VAT on salt means levy of a new tax. I feel it will be better if salt is considered an essential commodity and kept untouched from any taxes, Nahata said.

Imposition of VAT will plunge salt manufacturers into crisis," Nahata said.

According to ISMA, the national demand for salt is 1.20 million tonnes of which 50 per cent is used for edible purposes and the rest for industrial purposes. The total value of salt produced in Gujarat is around Rs 300 crore.