SOPA demands duty exemption

Government earns Rs 6,000 crore as Customs duty from edible oil import

The Indore-based Soyabean Processors Association of India (SOPA) has urged the government to exempt soya nugget, proteins, flour, milk, lecithin and milk powder from excise duty. It has also demanded that the tax on edible oils and oil cakes should be reduced to 1 per cent from 4 per cent.

Terming the soya sector "a high turnover, low margin" industry, SOPA Chairman Rajesh Agrawal, told Business Standard that the profit margin was marginal, between 0.5 per cent and 1.5 per cent. "A high incidence of commercial tax on these items will lead to tax avoidance," he said.

Urging the government to encourage framers to diversify into edible oil by offering incentives, he said a mere shift of 3-4 per cent of the area from grain to oilseed could make a sizeable dent in the import bill.

The association said the government was earning between Rs 5,000 and Rs 6,000 crore as the Customs duty from edible oil import, but no adequate infrastructure had been built for research and development.

"A part of it should be marked for promoting research to help the country become self-sufficient in edible oils," he said.

The association also said new port-based edible oil refining units should not be exempted from excise or sales tax, since these units were based on imported edible oils.

"These units are likely to affect existing refining capacity and may cause even the closure of few units," he said.

He said soyameal should be exempted from excise duty since it was mostly exported and earned foreign exchange worth Rs 2,000 crore every year. Soyameal also forms an important ingredient of cattle and poultry feed.

But the association said the present Customs duty structure for edible oils did not need any change since it served the purpose of protecting the interest of the farmers, until the developed nations withdrew subsidies to their farm sector.

Call for rebate

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• The association has also demanded that the tax on edible oils and oil cakes should be reduced to 1 per cent from 4 per cent
• "A high incidence of commercial tax on these items will lead to tax avoidance," says SOPA Chairman Rajesh Agrawal
• "The new port-based edible oil refining units should not be exempted from excise or sales tax, since these units are based on imported edible oils," Agrawal said