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The Times of India (TOI)
February 18, 2014 Tuesday
Tax exemption means less hassles for rice exporters
NAGPUR: P Chidambaram's decision to spare transport and warehousing of rice from service tax can be linked to intensive lobbying by exporters, including those from Gondia. They routed their demand through union heavy industries minister Praful Patel who contests polls from this rice-belt.
Rice continued to get service tax exemption as available to other agriculture products till an issue was raised last month saying only paddy was non-taxable. Paddy is the basic farm produce and rice as available to consumers is processed in mills. Gondia is a major centre for exporting non-basmati rice that mostly goes to poorer countries. Sources in the business community here say this internal clarification of the department to bring rice into tax net left them harried. They rushed to Congress MLA Gopaldas Sharma and Patel seeking help. Patel did not respond to a SMS send on this matter.
Sources in the service tax department said even otherwise no demand was raised from rice traders but the issue had cropped up only last month and there was confusion on whether rice is to be treated at par with paddy. Finally there is clarity on the matter.
However, even if the rice were taxed, it did not have any financial implication on the exporters. This is because exports itself are exempt from all kinds of levies though as a procedure taxes have to be paid first and a refund claimed later. The relief for the exporters is that they would now be spared from getting registered with the authorities.
Sources say note having to get registered has other benefits too, especially giving scope for under-reporting of transactions which can be otherwise available for scrutiny to other agencies. "Registration is the biggest nightmare for the businessmen as it is followed by filing of returns. Many are scared as the whole procedure leaves them exposed to an intense scrutiny by taxmen. It either brings to fore other irregularities or becomes a cause of harassment by sleuths," said a service tax lawyer.
Arun Wadra, a member of Gondia Rice Millers Association, said they had taken the help of Praful Patel to route their demands. Even as the tax was refunded on account of exports, the basic grudge was over the need of getting registered with the department. "It would have led to unnecessary paperwork, like filing returns, paying the taxes and getting a refund," said Wadra.
Those trading locally, on the other hand, said they were not aware of any service tax at all. "It will not make any difference as even otherwise there was no tax on transport of rice or storing it. In fact, rice is not stored in large quantities due to its perishable nature," said Pratap Motwani of Itwari Grain and Seeds Merchants Association.
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