VAT on industrial salt: Gujarat govt announces partial exemption, salt-makers want complete rollback

Indian Express‎: Ahmedabad: Wednesday, April 20, 2016.

The Gujarat government on Tuesday exempted small salt manufacturers and the co-operatives of salt pan workers from paying Value-Added Tax (VAT) on industrial salt. Finance Minister Saurabh Patel announced this in an official release while adding that the decision would also exempt these salt manufacturers from registration and maintaining various registers under the provisions of the VAT Act.

However, the salt manufacturers are not happy with the government’s decision and they have demanded a complete rollback of the VAT on industrial salt, citing technical difficulties in implementation of the new conditions imposed by the government to exempt small salt manufacturers.

As per the official release, salt-makers who manufacture salt on plots smaller than 10 acres in size and the co-operatives of salt pan workers who are into manufacturing of salt will be exempted from paying VAT on the sale of salt. The release also added that the manufacturers who produce salt on plots taken on lease from the state government would also be exempted from the tax.

The Gujarat government had, in its Budget for the year 2016-17 passed in the state assembly, levied 5 per cent VAT on industrial salt, with an estimated annual tax revenue income of Rs 5 crore. This was for the first time that the Gujarat government levied tax on salt in the state.

The decision had not gone down well with salt manufacturers in the state. And the manufacturers from across the state had gathered in Ahmedabad on April 12 to protest the tax on sale of industrial salt and to decide their future course of action. In the April 12 meeting, salt manufacturers threatened to stop supply of salt from April 26, if the government did not withdraw the same by April 25.

In the meeting, salt manufacturers had expressed the view that to bring the salt manufacturing sector under the “Inspector Raaj” by levying VAT on it was a move to harass the manufacturers. They had also said that more than 50 per cent salt manufacturers of Gujarat were doing small-scale businesses who did not even know basic computing.

Invoking the Salt Satyagraha launched by Mahatma Gandhi, the salt manufacturers had also threatened to protest till the tax was not rolled back. They have also formed a group, Namak Satyagraha Samiti (NSS), to protest the VAT on salt.

On the partial exemption, Bachubhai Ahir, NSS spokesperson, said, “We are not satisfied with the latest decision of the government. There are many issues related to the renewal of lease of plots and many salt workers don’t have renewed lease. Also, this decision is to divide salt manufacturers. We will continue our protest till the VAT on salt is rolled back completely. And our decision to stop the supply of salt for three days from April 26 stands.”

“The revenue generation from VAT on industrial salt is very small for the state government. And we don’t understand why the government is levying tax on such primary commodity as salt for which even Mahatma Gandhi had done satyagraha,” he added.

Harinesh Pandya, trustee of Agariya Heet Rakshak Manch, a group working for the welfare of salt pan workers, said, “We appreciate the government’s stand of partial withdrawal of VAT. At the same time, we continue our support to fight against VAT. We strongly demand total withdrawal of VAT on salt.”