Karnataka : GST on popcorn: Renewed calls for MSP procurement of maize
The GST Council’s clarification on popcorn tax rates has reignited Karnataka farmers’ demand for maize procurement under the MSP scheme. While maize is key for popcorn and cattle feed, the state has not procured it in five years, citing its exclusion from PDS. Farmers urge state action as private demand may drop due to stricter tax enforcement.
Bengaluru: The GST Council’s recent clarification on tax rates on popcorn has revived the dormant demand that the state govt must procure maize under the Minimum Support Price (MSP) scheme. Farmers are worried about the commercial consumption of maize, from which popcorn is made, with the crop potentially being affected due to the impending strict enforcement of tax law.The GST Council met on Saturday and clarified that ready-to-eat popcorn, which is mixed with salt and spices, attracts 5% GST, while prepackaged and caramelised popcorn are classified under the 12% and 18% brackets respectively. While there is no imposition of a new tax as such, the clarification means the govt would strictly enforce the law to collect tax, unlike in the past, and recover from evaders from 2017 with retrospective effect. This has given jitters to some traders, while consumers, especially movie watchers at multiplexes, are concerned about the prospect of paying more for their favourite snack. “The scenario will remain unchanged at PVR Cinemas as we were following the law to pay GST on popcorn promptly. Of course, the GST Council’s clarification concurred with the outlets that were not charging the tax, and obviously, the consumers may find it expensive at those outlets,” said Promod Arora, CEO of PVR Inox Multiplex.
Despite it being listed among 22 crops for procurement under the MSP scheme, Karnataka had stopped procurement of it in the last five years. The state govt continued its stand this year as well even as the Centre increased the MSP on maize to Rs 2,090 per quintal for the current year from Rs 1,962 last year. The repeated pleas from farmers have only fallen on deaf ears. Maize is is grown on 17.6 lakh hectares with a yield of about 54 lakh tons. “Farmers are well placed even when the govt is not procuring maize under MSP since private companies like Gourmet Popcornica buy a certain quality of maize for making popcorn. As we are expecting that the consumption may come down due to the latest development on the tax front, we are demanding that the state govt should start procuring it,” said T Yeshwavanta, general secretary of Karnataka Pranta Raitha Sangha. Meanwhile, the rationale of the govt for not procuring maize is that the crop is not covered under PDS (public distribution system) through which it distributes food grains like rice, ragi, and pulses like tur dal. “While maize cannot be included in the PDS system, the govt can leverage the demand for the crop in poultry and dairy sectors, as it is used as an ingredient of cattle feed. It can rope in the animal husbandry department to procure maize on MSP and distribute it to those who produce cattle feed,” said Yashawanta. Acknowledging this, agriculture minister N Chaluvarayaswamy, who is also chairman of the cabinet sub-committee on MSP, said the govt is considering the demand sympathetically.
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Source : The Times Of India
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