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The Cochin Oil Merchants Association (COMA) has approached the Subject Committee (Economic Affairs), Kerala Legislative Assembly, seeking withdrawal of the five per cent tax on coconut oil imposed in the State budget.
Thalath Mahmood, President, COMA, said that all the successive governments have fully exempted coconut, copra and its products from the levy of tax under KVAT Act and the proposed amendment to bring back those levies would be detrimental to the industry as well as coconut farming.
Even if tax is levied on coconut oil or copra, he said it would not bring any benefits to coconut oil in view of the input tax credit mechanism. Even in the absence of exemption on coconut and copra, oil millers will be liable to pay tax on the end-product like coconut oil at 5 per cent without any rebate. Thus, the levying of the tax on coconut oil in the budget would impact the traditional coconut oil industry which comprises around 1,200 millers in the small and medium sector.
The tax on coconut oil would push up the prices, leaving consumers to shift to other edible oils where there was zero per cent tax. Imported palm oil at much cheaper prices has already made inroads into the Kerala markets in a big way, he said.
According to him, there has been a considerable reduction in the arrival of impure coconut oil from neighbouring States following the initiatives of COMA to check adulteration at border check posts.
Meanwhile, the Onam festival demand coupled with active corporate buying pushed up prices of coconut oil and copra by at least ₹200 a quintal in Kerala and Tamil Nadu in the last two days.
Coconut oil prices went up to ₹7,800 a quintal in Kerala and ₹7,600 in Tamil Nadu, while copra prices shot up to ₹5,400 and ₹5,200 respectively. A buyers’ trend is prevailing in the market, which is likely to continue, he said.
Bharath Khona, former Member, COMA, said that the price increase is evident in the loose oil market in Tamil Nadu which went up to ₹1,200 for 15 kg against last week’s level of ₹1,100.
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