HYDERABAD: With stocks of sugar produced in Telangana accumulating and not finding many takers, thanks to neighboring states that supply of sugar at lower prices, the Telangana government is considering imposing tax on imports input.
Following the example of Punjab, which recently imposed 11% input tax to boost off-take of its own sugar producers, industries Telangana department sent a proposal to the Chief Minister K Chandrasekhar Rao to protect local sugar producers the elimination of VAT on their products as well as the collection of input tax on sugar from other states.
“There are two proposals on the proposed input tax. While some officials are of the view that the input tax should be five per cent VAT, some officials suggested that it is 11% in Punjab lines . The government has already taken a decision in principle to remove the VAT on sugar (local) “department sources said industries. Sugar producers in Telangana had been demanding the removal of VAT for quite some time.
Authorities said 10 mills in Telangana (three units of the joint venture Nizam Sugars and seven private units) producing about 3 lakh tonnes of sugar a year. However, factories in neighboring Maharashtra, Karnataka and Tamil Nadu have been downloaded almost 2 lakh tonnes of sugar each year Telangana. These units offer sugar at a lower price, resulting in lower withdrawals sugar produced in local mills. The sources said that about 1.5 lakh tonnes of sugar are lying idle with producers in the state.
200 sugar factories in Maharashtra, 40 in Tamil Nadu and 60 in Karnataka, these states show much higher yield than what is required for local consumption. Furthermore, against 10 kg of sugar produced from 100 kg of sugarcane crushed by mills Telangana, the mills in the other three states manage to extract 13 kg of sugar from a similar amount of sugarcane.
The export of sugar to Telangana is attractive for factories in these states, as they have to pay only the sales tax center and no VAT. However, the sugar mills in Telangana pay VAT of 5%, equivalent to about Rs 150 per 100 kg of sugar. Mills also pay a price support of Rs 2,600 per ton of cane farmers.
While the products of the sugar mills reduce losses of industries to some extent, most of the mills in the premises of the lack of Telangana to manufacture these products, including ethanol, power generation using bagasse and bio-fertilizer.
When contacted, Commissioner sugar and cane Bhadru Maloath said that “the proposal to impose entry tax and VAT on sugar scrapping has been sent to the state government. The state government is likely to take a decision very soon . “
