According to Ramesh Doraiswami, MD and CEO of the NBHC, fumigation services, which are a key scientific part of the storage of agricultural products, have been singled out for the GST tax, resulting in a “cost burden on the agricultural value chain”. It could also lead to lower profits for farmers or higher consumer prices, he said in a statement.
National Bulk Handling Corporation (NBHC), a warehousing service provider, said fumigation services, which are an essential part of the scientific storage of agricultural products such as wheat and rice, should be exempt from the levy of the goods and services tax (GST).
The GST Council recently announced that the exemption for fumigation of agricultural products in warehouses will be phased out from 18 July.
According to Ramesh Doraiswami, MD and CEO of NBHC, fumigation services, which are a key scientific part of the storage of agricultural products, have been singled out for the GST tax, resulting in a “cost burden on the value chain agriculture”. It could also lead to lower profits for farmers or higher consumer prices, he said in a statement.
Fumigation is a curative treatment and the only practical way to kill internal insects or insects living deep in the grain mass in most importing countries. The global demand for improved food safety standards has driven the demand for good quality food products. “In tropical countries like India, where the climatic conditions are favorable for the infestation of stored grain pests, fumigation plays a more important role in controlling and managing the infestation.” “This fumigation process is a mandatory quarantine requirement,” Doraiswami explained.
Unscientific storage accounts for about 10% of total post-harvest losses in India. Annual storage losses are estimated at 14 million tonnes, or about 7,000 crores, with insect pests of stored grain alone accounting for 1,300 crores, according to the CEO of NBHC.
“Because fumigation and prophylactic treatment are an essential part of scientific storage, these services must be performed with precision, as even minor damage to quality caused by insects can lead to a complete loss of the commercial value of food grains. ” Furthermore, it is possible that this additional fee will result in fumigation services performed in an unorganized manner by untrained operators, posing risks to operator safety and harming public safety,” he said.
Moreover, given the low cost of fumigation, the GST levy has a negligible impact on revenue to the national treasury when weighed against the negative impact on grain quality and farm income.
“In light of the above, we strongly urge the Department of Agriculture, the Warehouse Department Regulatory Authority, the GST Board and the Central Excise Board to reconsider the decision by rescinding the proposed withdrawal. of the GST exemption on fumigation services for agricultural products in warehouses.”, Doraiswami added.
First published: July 10, 2022, 07:10 IST
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