Traders play down impact of VAT removal on guar

Rumours that value added tax (VAT) on guar in Rajasthan will be lifted shortly have recently gained momentum. However, local traders said this would not have any long-term impact on the prices of the crop.

The possibility that the 4 per cent VAT currently levied on both guarseed and guargum in the state might be lifted has been doing the rounds in the local markets for long.

"It is not confirmed whether guar will be made VAT-free. It may or may not be lifted in the near future," said Navratan Daga, a Bikaner-based trader.

He added that if the tax was lifted, there could be a rise of around Rs 25-30 a quintal in spot market prices, but they would return to normal in the following days.

Commodity analysts, on the other hand, said if VAT was lifted in Rajasthan there would be a fall in the prices. But at this moment, it was just a rumour, and the current price movement was solely dependent on factors such as production and arrival of the crop.

After being in a bearish phase in the spot market last week, the guarseed prices today firmed up, reaching the Rs 1,610 a quintal level in Bikaner. They had dipped to an intra-day low of Rs 1,530.