Central law removing mandi tax: Traders, mandi operators spar, call for bandh

By: |
August 21, 2020 5:15 AM

Buoyed by the central law, traders are objecting to the mandi impost and say that trade within the confines of the mandi is no longer viable for them.

Presently various taxes/fee/commission in APMCs in various states range from 1% in some states to 8.5% in Punjab.Presently various taxes/fee/commission in APMCs in various states range from 1% in some states to 8.5% in Punjab. (Representative image)

Are these the first signs of the crumbling of the monopolistic mandi systems that govern the country’s agriculture trade?

The Agriculture Produce Market Committees (APMCs) in Maharashtra are fighting for their survival after the Centre promulgated an Ordinance in June permitting sales of agricultural produce from farmers to consumers outside the ambit of the APMC Act.

Under the new law, no market fee is levied on goods sold outside the mandis. However, the Maharashtra government has not correspondingly amended the state’s APMC Act, with the result that traders operating within the market yards are governed by the APMC Act and are subjected to the market fee of 0.5% to 1%.

Buoyed by the central law, traders are objecting to the mandi impost and say that trade within the confines of the mandi is no longer viable for them.

On the other hand, market authorities say that the fee should not be removed. Both the sections have called for separate bandhs on August 21 and August 25.

The Chamber of Associations of Maharashtra Industry and Trade and Federations of Associations of Maharashtra have called for a bandh of APMCs in the state on August 25 seeking abolishing of the Mandi tax.

The Maharashtra Rajya Bazaar Samiti Sahakari Samiti Sangh on the other hand has stated that the 306-odd market committees in Maharashtra are in debt and the market levy is required not only to provide infrastructure facilities to farmers and traders and have given a call for the APMCs to remain shut on August 21.

Dilip Mohite Patil, president, Maharashtra Rajya Bazaar Samiti Sahakari Sangh, a federation of the 306 APMCs in the state claimed that around 100-125 market committees in Vidarbha and Marathwada regions have reported almost no business and are on the verge of closure after the central Ordinance was announced. “APMCs have provided livelihood to nearly 1.5 lakh hamals, thousands of traders and income to thousands of farmers. APMC have to create their own source of funds and have taken loans from banks to provide infrastructure to farmers and traders. Now since traders are preferring to trade outside the Mandis, the market committees are losing on income and are finding it difficult to maintain expenses,” he pointed out. The Sangh will file a writ in the Bombay High Court seeking a rollback of the Ordinance, he said.

Sudhir Kothari, chairman, Hinganghat APMC in Wardha region said: “ The Ordinance is being challenged on different levels in Punjab and Chhattisgarh. Now the federation of market committees in Maharashtra as well plans to challenge the Ordinance and will go on a strike on August 21 to protest against the Ordinance”. Kothari is also part of the high-level committee constituted by the Maharashtra government to study the Ordinance pointed out that only a single meeting has been held so far has seen nothing much happen.

Presently various taxes/fee/commission in APMCs in various states range from 1% in some states to 8.5% in Punjab. APMCs are stunned at the prospect of all trade moving out of their jurisdiction due to this advantage of zero tax in the trade area. There is a feeling in APMCs that in due course, the entire APMC ecosystem may itself wither away although not many are willing to say this on record.

Karnataka, Gujarat and Punjab have abolished the market cess. Maharashtra has around 306 APMCs with an annual turnover of `50,000 crore per annum. Of this, fruits and vegetables alone account for `20,000 crore, food grains, pulses and oilseeds account for another `20,000 crore, while spices and dryfruits and other local produce account for the remaining `10,000 crore. APMCs draw their income from cess which ranges from 0.5% to 1% of the trade value of the commodities. In Maharashtra, the APMC income comes up to `350 crore annually.

Mohan Gurnani, chairman, CAMIT, said that a nine-member committee has been formed to decide the future course of action including an indefinite bandh of the market committees. Karnataka, Uttar Pradesh and Punjab have already amended the APMC Act providing a level playing field for traders and farmers, he said.

APMC officials said the government has already been trying to promote alternate market mechanisms through Direct Marketing Licences of which around 200 licences have already been issued in addition to 63 private markets.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Terrible Thursday: Stocks crash, rupee weakens, bonds steady
2Top end of price band: UTI AMC aiming to raise Rs 2,160 crore in IPO
3Sebi penalises Biocon’s employee for violating insider trading norms