Rs 40-cr loss to PIDB has state weighing new options

Infrastructure cess on crops is the main source of revenue for the PIDB. However,the Excise and Taxation Department has been consistently falling short of the corresponding collections of the Punjab Mandi Board since the last few years.

While state’s value-added tax (VAT) collections are likely to touch Rs 7,000 crore this year (the Excise and Taxation Department collects four per cent VAT on crops) and an unprecedented Rs 1,136 crore were collected as four per cent market fee and four per cent for Rural Development Fund (RDF),the good harvests and crop prices have not reflected on resources of cash-starved PIDB.

The Finance Department is now considering the possibility of passing on the responsibility of infrastructure cess collection from the Taxation Department to the Mandi Board,which has been collecting higher corresponding amount from dealers as market fee and RDF.

A meeting of Excise and Taxation Department and Mandi Board officials was held last week under Principal Secretary,Finance,SC Aggarwal. “The government is examining various options and a decision will be taken after weighing the merits of the proposal,” Aggarwal said.

According to Mandi Board secretary AS Miglani,the transfer of responsibility will require amendment to the Punjab Agriculture Produce Markets (APMC) Act,which governs the functioning of the Mandi Board.

One of the reasons for the revenue loss,say officials,can be the fact that the Excise and Taxation Department,unlike the Mandi Board,collects taxes only from registered dealers. Since in smaller mandis,many small dealers have turnovers below the registration limit and are therefore not registered,they do not fall under the net of the Taxation Department.

And the PIDB is not the only department losing revenue. The Mandi Board,too,is suffering losses owing to Punjab’s largesse of allowing market fee exemption for 10 years to top three agro companies — Laxmi Overseas,KRBL and Pratap Spintex — has resulted in further loss of Rs 18 crore (Rs 9 crore as market fees to the Mandi Board and Rs 9 crore to the RDF) this year.

Provided under Rule 30-C of the APMC Act in 2006,the exemption is made for mega projects undertaking value addition activities.

However,besides loss of revenue,the grounds for granting exemption are also not tenable,say Mandi Board officials. For one,both KRBL and Laxmi Overseas just process rice from paddy,which is not a value addition. Also,their turnovers have increased manifold since the time of granting the exemption,which amounts to infringing on the rights of smaller industries in the trade that have to shell out the entire fee,they add.