Cardamom demand has fallen to a trickle with traders not keen on stocking the commodity in fear of the transition to GST.
Cardamom demand has fallen to a trickle with traders not keen on stocking the commodity in fear of the transition to GST. The market has declined from the recent high of Rs 1,400 per kg to less than Rs 1,000 per/kg due to sluggish domestic demand. India is the second largest producer of cardamom in the world after Guatemala and the biggest consumer of the spice. “Buyers in terminal market of Kochi and up-country buyers in North India have been advised to keep nil stocks by the end of June so that the transition to GST will have a minimal impact,” Cardamom Growers Association president Antony Mathew told FE. He added that the decline in the market would have been huge if not for the fact that it is off-season and supply is low. Mathew said that the traders are taking a wait and watch attitude as they are not clear about the stocks during the transition period. Currently, the purchase of small cardamom by a dealer registered in Kerala is treated as local purchase and KVAT at the rate of 5% is applicable, whereas the purchase by a dealer registered in any other state is treated as inter-state purchase and CST at the rate of 2% only is applicable.
Sherry Oommen, head (tax and corporate laws) with Nash Capital Partners said that he been advising his clients dealing in agri-commodities to keep minimal stock during the transition. “The credit of input tax on the stock will be eligible for carry forward only once the supplier files and application in Form GST Trans 1. The said form would need to be filed within 90 days from the appointed date. Consequently, only once the said application is filed and accepted would the credit be admissible.
The delay in the aid process would cause a working capital impact,” he added.
GST on cardamom has been fixed at 5% and traders have the ease of doing business all over India after paying the tax. They also are eligible for input credit while doing further business and this will help reduce the cascading effect of multiple taxation, sources said. Kerala is the biggest contributor of cardamom to the country having a share of around 70% in the total production, with Idukki accounting for the lion’s share. Cardamom auctions are expected to resume in July after the monsoon break and start of fresh arrivals. Cardamom prices had reached a record high of Rs 1,950-2,000 per kg during June 2010 due to shortage of the commodity.