Kerala tyre-makers ask CM to review additional taxes

Our Commodities Bureau in Kochi

Automative Tyre Manufacturers’ Association (ATMA) has appealed to the state Chief Minister AK Antony to reconsider the turnover tax (TOT) imposed on rubber dealers and also the additional sales tax (AST) on purchase tax imposed on natural rubber.

In a letter written to the chief minister, chairman of ATMA, Mr Reghupati Singhania submitted that “the deleterious effects of any tax had to be given due weightage, if not the same may prove to be counter-productive from the larger perspective”.

He noted that the levy of 15 per cent additional sales tax on natural rubber and turnover tax of 1.5 per cent on dealers of natural rubber with an annual turnover of Rs 30 lakh, needs to be reconsidered.

The Purchase Tax of 11 per cent on natural rubber is already a high rate. Since rubber cess of 1.50 per kg has to be paid, the total tax content works out to 15 per cent, he pointed out.

Between the rubber grower and the rubber consuming industry, rubber changes hand from dealer to another and there may be two or three transactions.

Since many such dealers would have an annual turnover of over Rs 30 lakh forcing them to pay, the same may, in addition to additional sales tax, would increase the final price of the natural rubber, Mr Singhania said adding that this would also lead to multiple taxation at different stages for the same product.

He further argued that a rough calculation made by the Association has indicated that both the above taxes put together would impose an additional annual financial burden of Rs 48 crore on tyre industry.
Mr Singhania said that tyre industry, which consumes 50 per cent of natural rubber produced in the country, has been going through an extremely difficult period, with profits tumbling down and demand for tyres, which account for over 70 per cent of the turnover of the industry, remaining stagnant.

The industry is neither in a position to absorb the financial burden on account of imposition of additional sales tax and turnover tax nor pass on the same to consumers, with more tyres chasing less demand, he added.