The Spices Board has sought measures for the unification of tax rate to facilitate the entry of local dealers in the state to the small cardamom trade.
The Board pointed out that the unification of tax rate in Kerala and Tamil Nadu and the implementation of KVAT at two per cent rate will facilitate the booming of cardamom business in the state. It will also facilitate the entry of more local dealers to the small cardamom trade.
Spices Board chairman A Jayathilak wrote to the Kerala Agriculture Production Commissioner pointing out that the marginal revenue loss due to the reduced taxes will be compensated by the entry of more local traders.
The cumulative effect will be reflected in the price recovery to the growers owing to the increased demand. The Spices Board is committed to issuing more small cardamom dealer licenses to increase the bidding participation in e-auction, he said.
In spite of the efforts of the Spices Board to issue more small cardamom dealer licences, around 80 per cent of the dealers who participate in the e-auction are from Bodinayakanur,
Thevaram and Cumbum. The scenario is owing to the difference in the tax structure of the two states.
The purchase of small cardamom by a dealer registered in Kerala is treated as local purchase and KVAT at the rate of five per cent is applicable, while purchase by a dealer registered in any other state is treated as inter-state purchase and central sales tax (CST) at the rate of only two per cent is applicable.
The inter-state buyer gets a tax benefit of around `20 per kilogram purchased through an e-auction. It gives the inter-state dealer a distinct competitive advantage in the small cardamom trade. Further, as inter-state purchase fall under the CST regime, they enjoy the advantage to transfer goods to any part of the country as ‘stock transfer to own godown’ at no additional tax. The scenario acts as a stumbling block to attract more dealers from Kerala, the board pointed out.
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