UP industry upset over state's stance on Mandi Tax

The industrial sector in Uttar Pradesh is unhappy with the state government for not keeping its promise on exempting private entrepreneurs from mandi tax on purchase of agricultural produce, as mentioned in the UP Food Processing Policy 2004-05.

This was expressed by A Drona, resident director, PHD Chamber of Commerce and Industry, Lucknow, at a conference of the city's industrialists and entrepreneurs.

Elaborating on the subject, he said entrepreneurs are feel agitated over the government policy on not adopting a unified licensing procedure for procuring all types of agricultural commodities from the state mandis.

"At present, entrepreneurs have to apply for a number of licenses for buying different agricultural commodities from the state's mandis," said Drona.

According to him, another big problem in Uttar Pradesh is of tax evasion. Tax evasion in UP is estimated to be well over Rs 5,000 crore a year. A large number of traders (5 lakh approximately) pay no tax at all. Financial experts attribute this to faulty tax planning of the state government.

The state government's stance on value-added tax (VAT) did not change even after pressure from the central government.

UP might be stranded as the only non-VAT state in India (after Tamil Nadu is preparing to change its stance).

The government seems to think that VAT is not necessary since even without it the revenue collection grew at a robust 26-27 per cent in the last financial year. Though industry experts believe the growth rate could have been higher with VAT.