NDIA’S BIODIESEL, EDIBLE OIL PRODUCERS CONCERNED OVER NEW TAX RULES

Producers of biodiesel and edible oil in India expressed concerns that the country’s new goods and services tax (GST) which would come into effect on 1 July, could raise the prices of their products.  Sandeep Chaturvedi, president of the Biodiesel Association of India, said the imposition of an 18% GST rate on biofuels would “adversely impact” the Indian biodiesel, which would fight “tooth and nail” against the new biodiesel and ethanol sales tax.  No direct federal tax on biodiesel exists at the moment in India, but biodiesel distributors pay maximum of 6% VAT, a state excise duty and other fees that generally drag the total tax on biodiesel to around 14%.  

On the other hand, edible oil producers are also concerned about the new GST regime, which would see oilseeds attract a 5% tax, unlike most other agricultural products such as grains and pulses which are exempted from the new taxes, reported The Economic Times of India.  The expected increase has led to edible oil manufacturers locking up large funds, as they would be able to only partially recover the tax they pay on edible oil and de-oiled cake. Under the government plans, however, edible oils would be included in the 5% GST bracket, while only the de-oiled cake would be exempt.

In addition to biodiesel and edible oils, the price of ghee, a type of clarified butter used extensively in India kitchens and one of the principal consumer products sold in the country,  was expected to go up, as it woudl draw a GST of 12%, according to Agro & Food Processing. Hence poor consumers might no longer be able to afford ghee.  The GST reform is intended to streamline India’s sales taxes by imposing nationwide rates of 0%, 5%, 12%, 18%, and 28%.  Announced in May, the new tax regime will come into force next month.