The Centre today directed the state governments to exempt the bonus amount payable on wheat procured from farmers at minimum support price from the purview of value added tax (VAT) and other levies.
"The government of India has decided to give an incentive bonus of Rs 50 per quintal for procurement of wheat in 2011-12 marketing season over and above the wheat support price of Rs 1,120 per quintal," an official statement said.
"This (bonus) will be subject to the condition that state governments shall fully exempt this bonus amount from levying any state tax and levy," it said.
Over and above the minimum support price (MSP), the Centre offers bonuses to farmers to enhance procurement.
The bonus of Rs 50 per quintal will be paid to wheat farmers only in the 2011-12 rabi marketing season that began from middle of March.
The Centre noted the incentive bonus would also be paid to those farmers who have sold wheat to state procurement agencies and the FCI upto the date of the issue of this order ie today.
Wheat procurement is likely to pick-up by next week and continue till June. So far this year, wheat procurement is lower by 64% at 46.81 lakh tonnes, as against 130 lakh tonnes in the year-ago period because of less arrival of grain in markets of Punjab and Haryana.
Food Corporation of India has set a target to procure 26.2 million tonnes of wheat in the current year against 22.5 million tonnes last year as country''s wheat production is estimated to be at a record high of 84.27 million tonnes in 2010-11.
In 2009-10 crop year (July-June), the country had produced 80.8 million tonnes of wheat.
