The association has asked for a complete removal of excise duty from milking machines, milk cans and milk chilling equipment used in milk cooling-cum-collection/distribution.

Excise on milking machines at 8 per cent was removed in 1996-97 but reimposed the next year. The association said that to put a check on adulterated milk and to encourage the organised dairy sector to accelerate quality milk production, the excise duty should be withdrawn.

A uniform excise duty of 8 per cent on both dairy machinery and its components has been demanded by IDA. At present the excise on machinery is 8 per cent while duty on components is 16 per cent.

The argument is that high excise duty discourages the use of dairy machineries in milk plants where its use is important to help increase theshelf-life of milk for the convenience of consumers and also to facilitate enforcement of sanitary and hygienic processing conditions in the plant.

The association has also asked for a scaling down of duty on ice-cream and condensed milk to 8 per cent from 16 per cent and 13 per cent respectively. Gradually, duty should be totally removed. It has argued that condensed milk is primarily used in milk scarce far flung areas and in defence establishments. Therefore, it should also be treated similar to liquid milk.

To solve the problem arising out of different rates of sales tax being charged by different states, the association has recommended that tax should be on expenditure and not on sale. However, to start with, at least a uniform sales tax on dairy products has been recommended on the lines of cement, sugar, iron, steel etc.

IDA has also brought to the attention of the task force various disparities in tax structure prevailing in different states. In Andhra Pradesh and Punjab milk is not exemptedfrom taxation where as in other states no tax is levied on it. While in Andhra Pradesh milk is taxable at the point of first sale in Punjab a purchase tax of 4 per cent is levied. The Central sales tax (CST) on milk products is 4 per cent in Punjab whereas in Haryana it is 1 per cent and in Chandigarh it is 0.7 per cent.

According to IDA, these disparities created a lot of administrative problems and encourages malpractices. It suggested that multi-point tax arising out of vertical integration of milk production, processing and marketing, particularly relevant to the State Milk Cooperative Federations should be reviewed and single-point tax should be introduced.

The prevailing Harmonised Commodity Description & Coding (HCDC) system used for deciding the customs duty and excise duty on dairy machinery and equipment does not include most of the machinery in the description relevant to the dairy processing, the IDA has pointed out. The unclear contents cause variations in interpretation. The associationsuggested that the prevailing system should be reviewed and parity should be brought into the system.

Finally, the association has asked that just like primary societies, federated apex bodies should also be exempted from income tax as they too function for the welfare of farmers and agriculturists.