VAT and the season: Govt gets the ‘date’ wrong

MUMBAI: Wet is dry for the Maharashtra government. Or, so it seems. The state government’s decision to classify wet dates as ‘dry fruits’ for levying value added tax (VAT) has angered Muslims and Hindus alike. For Muslims, wet dates are an essential element at Iftaars — the breaking of the day-long fast during Ramzan. For Hindus, Khajur is one of the few permissible eatables during fasts.

The price of wet dates may soon rise, thanks to the state government that sees wet dates as dry fruits. Consequently, import of wet dates will attract a minimum 4% VAT from October 1 as against 0% now.

“So far, the state government has not made clear the tax wet dates will attract. We presume it will be in the lowest slab of 4%,” Jatin Ashar, spokesperson for the Mumbai Dates Importers Association, told ET.

The change of classification will affect the prices of wet dates across the country since Mumbai is the port of entry for almost all wet dates consignments, the association said. According to a state government official, over 90% of wet dates imports are recorded in Mumbai. The Mumbai Port Trust has a dedicated slot at Hey Bunder to unload dates cargo.

On an average, India imports around 1,50,000 tonnes of wet dates a year from west Asian countries such as Iran, Saudi Arabia, Oman and United Arab Emirates. In the retail market, the commodity is priced between Rs 11 per kg to Rs 18 per kg.
“The change of classification has taken place in ‘95 but we never actually levied any tax,” a finance ministry official said.

“Even the central government has acknowledged that wet dates should be considered as fresh fruits and not be clubbed with dry fruits for taxation purpose. But the Maharashtra government is ignoring the Centre’s decision,” the association said.

Sources, however, indicate that the state government may defer its decision of levying tax from October 1 by a month considering the popular mood. “We may start collecting tax from November 1,” an official said.