Biscuit manufacturers have sought abolition of excise duty and reduction in value added tax by as much as 4 per cent in the Budget, stating that the product is consumed by common man and also distributed as relief material.
In a pre-budget memorandum to the Finance Minister, Indian Biscuit Manufacturers' Association (IBMA) has said that there should be total exemption from excise, irrespective of categories, for biscuits. It also demanded reduction in VAT to a uniform 4 per cent, maximum.
IBMA President B P Agarwal said the government should consider the demand as biscuit is consumed by aam aadmi (common man) and is also a product distributed as relief material during natural calamities.
At present, central excise duty on biscuits, cookies and wafers with maximum retail price (MRP) above Rs 100 per kg is eight per cent, while VAT in many states is 12.5 per cent, the industry body pointed out. On cakes, however, the excise duty is levied at four per cent.
Besides, Uttar Pradesh has increased VAT to 13.5 per cent from June 1, 2009 on cakes, cookies and wafers, IBMA said.
Biscuit manufacturers have been pleading for reduction in VAT for the past two years pointing that processed food products such as bread, bhujia, namkeen, jam, jellies and fruit juice attract either four per cent or nil VAT.
IBMA said small and medium manufacturers consisting about 150 units are facing erosion in their profitability and competitive capability due to the heavy burden of taxation compounded by additional levies in some states.
India, world's third largest biscuit producer after the US and China, produces nearly 19.5 lakh tonnes annually while the size of the sector is estimated at Rs 8,000 crore with 65 per cent of the output coming from the organised sector.
Source : Business Standard