Not so sweet: GST Council may consider sugar cess in next meeting

The Goods and Services Tax (GST) Council, headed by finance minister Arun Jaitley, will likely take up as early as in its next meeting, a proposal for the imposition of a cess on sugar to create a fund that will help mills clear cane dues owed to farmers, a senior government official said.

With cane arrears to farmers mounting, an informal ministerial panel explored options such as production-linked subsidy, imposition of sugar cess and reducing GST on ethanol to help sugar mills in clearing dues worth Rs 19,000 crore to sugarcane farmers.

The fund is proposed to finance the gap between the cane price mills can pay to farmers in accordance with a revenue-sharing formula recommended by the Rangarajan Committee and the benchmark rate — fair and remunerative price (FRP) — fixed by the central government.

Road Transport and Highways Minister Nitin Gadkari, Food Minister Ram Vilas Paswan and Petroleum Minister Dharmendra Pradhan held a meeting to discuss ways to deal with huge cane arrears to growers. The meeting was also attended by senior officials of PMO and ministries of agriculture, commerce, food, petroleum and finance.

“Sugarcane arrears have touched about Rs 19,000 crore. We discussed this issue. There were several suggestions like production linked subsidy, sugar cess and reduction of GST on ethanol from 18 per cent to 5 per cent,” Paswan told reporters after the meeting. He said, the government has not decided anything now and there could be one more meeting before finalising Cabinet proposal on this issue. Paswan said.

Sources had earlier said a cess of Rs.1-1.50 per kg of sugar would be adequate to ensure farmers get their dues on time and mills are in much better shape as well. The food ministry had also written to the ministries of law and finance for advice if indeed such a cess could be levied on the GST.

Source: FE

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