Kerala scraps agricultural income tax on plantation crops
12 October 2018
The Kerala cabinet has decided to scrap agricultural income tax on plantations and declare a moratorium on agriculture income tax, meeting a long-pending demand of the plantation sector. Chief minister Pinarai Vijayan is expected to make an announcement regarding this on the floor of the state assembly during the ongoing session.
The Association of Planters of Kerala (APK) hailed the state government’s decision to abolish agriculture income tax (AIT), saying Kerala is the only state levying AIT at 30 per cent of profit.
According to the association, successive governments in the state have been sitting on commission reports most of which have suggested removal of AIT on plantation crops.
Kerala accounts for 82 per cent of the rubber, 71 per cent of cardamom, and 21 per cent of coffee produced by the country's plantation sector. The sector has been bedeviled by rising production costs and poor price realisation on the back of rising imports.
The cabinet decision endorses the recommendations of the Krishnan Nair Commission that studied the issues plaguing the sector. Appointed by the previous Congress-led government, the Commission had proposed either scrapping or declaring a five-year moratorium on agriculture income tax.
Neighbouring Tamil Nadu does not levy taxes on the plantation sector, but Kerala charges Rs700 a hectare as plantation tax. Besides, income tax is charged at 50 per cent of profits, while in other states it is much less.
The current Left Democratic Front Government has already reduced the agriculture income tax to 30 per cent and now has declared a moratorium on the tax. The Commission had also flayed the building tax on workers’ one-room tenements attached to the plantations.
It has reportedly recommended rebuilding the quarters with at least two bedrooms and toilet facilities.
The cabinet has accepted both these recommendations. Local self governments are being advised to exempt these quarters from building tax.
The government will bring them under its comprehensive LIFE housing scheme as they are beyond repair.
New quarters will be constructed with the cost shared equally by the state government and the plantation managements.
The chief minister also said the seigniorage of Rs2,500 per cubic metre on rubber wood will be scrapped. (This is a levy on rubber wood raised on lands leased from the government.)
Planters, however, say while the decision is in the right direction, these measures alone may not solve the sector’s financial crisis.
Plantations should be allowed to divesify into intercropping, multicropping, standalone cultivation, agro forestry, vegetable, green house, and precision farming, water harvesting and conservation, renewable energy generation without changing or hampering the basic structure, say Ajith BK, Secretary, APK.
The turnover of Kerala plantations was Rs21,000 crore in 2012-13, which has dropped to Rs7,800 crore in 2016-17 due to import thteat and a global slump in commodity prices. The sector supports nearly a million people directly and indirectly.