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Coconut shell dealers may Split under GST regime | Tax does not cover Raw Material Suppliers and Buyers

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Coconut shell dealers are liable to pay the tax of 12 per cent Goods and Services Tax (GST) on desiccated coconut for production and exports, while raw material suppliers and buyers are not covered under the new regime. Traders and Exporters said that in an industry, this has come to blow by threatening thousands of jobs.

They said for the desiccated coconut, “high” GST rate was a setback to the industry have been rising at a time when both the domestic demand and exports. To make biscuits and cookies, this desiccated coconut is used.

Read also GST: Arun Jaitley Indicates Scope for Rationalisation of GST Rates

In southern states, desiccated coconut invited taxes between 0 per cent and 5 per cent, where it is mainly produced.

12 per cent goods and services tax (GST) on desiccated coconut for production and exports

12 per cent goods and services tax (GST) on desiccated coconut for production and exports

A coconut shell dealer V. Kalimuthu from Pollachi, Tamil Nadu said that the shells are collected from farmers, households marriage halls, scrap dealers, and copra units.  He also said that according to a new regime, at a source, there is no tax on coconut shells and charcoal is also excused from GST. So only the coconut shell dealers will pay 5% tax.

It is highly unorganized, and during the rainy months, the quantity of shells collection is low. On an average, each dealer trades up to 20 tonnes of shells a day. These shells are supplied to charcoal makers and some units add value to it making activated carbon. So, the GST is high for these in the local and export markets. Anil PorwalBSE -2.91 %, managing director at Mahavir Coconut Industries said,

“There are around 80 desiccated coconut units in Tiptur in Karnataka (the largest cluster for the product in the country), employing thousands of people.Most of them have cut production by 30 per cent,” 

 A majority of coconut farms are in Tamil Nadu, Kerala, and Karnataka. In T.N., there are about 200 coconut shell suppliers, dealers, and charcoal unit owners. A majority of the shells from Kerela will go to the charcoal units in Karnataka.

Raw material suppliers and buyers are not covered under the new regime.

Raw material suppliers and buyers are not covered under the new regime.

Read also Include Alcohol, Petroleum Products in GST | IACC Presents 11 Points to Streamline GST Rollout

The dealers also supply the coconuts to industries for boilers which can be used as fuels. Most dealers do not have invoices or bills for their purchase and sales. Ganesh Vittal, who is the partner of largest desiccated coconut exporter in India, Vittal Agro Industries in Kasargod told that

“We have become price competitive with other major sellers like the Philippines Indonesia, Vietnam and Sri Lanka. As a result, the quantity exported has shown a huge increase,” 

Exporters are concerned that the high GST rate will make Indian desiccated coconut uncompetitive in the global market.

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A Mechanical Engineer by education but a content writer by passion. He has been in the field of Content Writing and Marketing for six years. He loves to write in a wide range of genres. Contact me at [email protected]

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