Mrs. Vandna Sharma & Anil Sharma
Indian fisheries and aquaculture is an important sector of food production, providing nutritional security to the food basket, contributing to the agricultural exports and engaging about fourteen million people in different activities………
National Fisheries Development Board.
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Fisheries sector plays a vital role in Indian economy through substantial forex earnings, employment generation, supporting livelihoods of millions of fishers and ensuring nutritional and food security. Contribution of fisheries to total Gross Domestic Product (GDP) is about 1.3 percent. Constituting about 6.3% of the global fish production, the sector contributes to 5.15% of the agricultural GDP. Fish and fish products have presently emerged as the largest group in agricultural exports of India, with 10.51 lakh tonnes in terms of quantity and Rs.33,442 crores in value. This sector generates employment to 14 million people. This accounts for around 10% of the total exports of the country and nearly 20% of the agricultural exports. More than 50 different types of fish and shellfish products are exported to 75 countries around the world.
Considering the main livelihood, historically, fish, fish products and fishing inputs were exempted from commercial taxes by almost all coastal states in India. However, over the years, the modernization of fishing paved the way for introduction of new fishing technologies and taxes were also introduced on boats and engines. The other items were always outside the regime of commercial taxes. The Non-Governmental and Community Based Organisations (NGOs and CBOs) and co-operatives working in the sector also enjoyed exemption of taxes in the supply of fishing inputs. When the Value Added Tax (VAT) was introduced in 2005, no new taxes were introduced but the tax rates were marginally increased on taxable items.
But with the introduction of the GST in India, it is going to change the commercial tax scenario prevailing in the fishing sector. Stakeholder are of the view that it is will hit hard. Almost all the items related to fisheries sector are subject to GST.
The Tax Rates – GST vs VAT
The VAT Rates had been taken for comparison with new GST Rates.
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Fish and Fish Products
| I nputs | Commodity | VAT | GST |
| Fishing Inputs* | FISHING VESSELS | 5% | 5% |
| OUTBOARD MOTOR | 14.5% | 28% | |
| ICE BOXES | 14.5% | 18% | |
| SPARE PARTS | 5% & 14.5% | 28% | |
| REPAIR LABOUR CHARGES | 0% | 18% | |
| FISH, DRIED | 0% | 5% | |
| FISH MEAT, CHILLED / FRESH | 0% | 5% | |
| FISH FILLETS, CHILLED / FRESH | 0% | 5% | |
| SEA CRAW FISH, CHILLED/FRESH/LIVE (OTHER) | 0% | 5% | |
| FEEDS FOR FISH | 0% | 0% | |
| Fishing Hooks, Nets and Tackles | FISHING HOOKS | 0% | 12% |
| FISHING RODS | 0% | 12% | |
| FISHING ROPES (OTHER) | 0% | 18% | |
| FISHING ROPES, NYLON | 0% | 18% | |
| FISHING TACKLES | 0% | 12% | |
| FISHING TWINES (OTHER) | 0% | 12% | |
| Navigational Equipment | COMPASSES | 14.50% | 28% |
| DIRECTION FINDING COMPASSES | 14.50% | 28% | |
| NAVIGATIONAL INSTRUMENTS | 14.50% | 28% | |
| NAVIGATIONAL INSTRUMENTS, PARTS | 14.50% | 28% | |
| RADIO NAVIGATIONAL AID APPARATUS | 14.50% | 28% |
The VAT Rates had been taken for comparison with new GST Rates.
Source. Dakshinbanga Matsyajibi Forum(DMF)
The GST rates introduced in the fisheries sector inputs have increased the cost of the fishing implements and thereby will reduce the income of fishermen. This erosion is happening when the sector is facing serious crisis of increase in both investment and operating costs and dwindling returns in fishing. It’s is also a fact that the frequency of replacement of fishing equipment like boats and engines had increased because of high wear and tear from increased voyage time for fishing in distant waters where the resources are available. The fishermen were also forced to buy new nets and other fishing implements frequently because of its loss or damage in the sea due to cross over of merchant ships in the fishing ground and rough sea.
There is no denying the fact that the fishermen spend a major portion of his income annually for replacement of his fishing inputs and the levying of new taxes at very higher rate will take away a major portion of his income as taxes. It is not in the interest of natural justice and also not conforms to the “equity” principles. Fishing community is still to be one of the most backward communities economically in the country and fishing is their only livelihood option.
A Comparison of similar sectors with Fisheries under GST regime.
The following table gives us a comparison of GST rates in different sectors with fisheries which proved that injustice has been done with fisheries sector under GST.
| Agriculture | Dairy Sector | Cashew / Coir Industry | Fishery |
| GST of Fertilizer reduced to 5% from 12%
GST of Tractor 12% GST on Spare Parts reduced from 28% to 18%
|
GST of Dairy Products reduced from 14.5% in VAT to 5% except butter from 14.5% to 12% |
GST of Cashew Nut reduced to 5% from 12%
———————- GST of Coir Mats reduced to 5% from 12% |
Marine Engines included in the highest GST category of 28%
Fishing hooks, ropes and nets etc is taxable commodity for the first time at 12% Dried Fish is taxable for the first time at 5% |
The tractors used in the agricultural sector are similar to marine engines in fishing is taxed at 12% while that for engines is 28%. The levying of tax on dried fish is a surprise which is the main livelihood of fisher women especially those who are aged in the community. It should be compared with the tax reduction allowed for cashew, coir, dairy products to benefit the women working in these traditional sectors. It is surprising to note that those who were aware of the toiling communities in other sectors were not aware of the fishing community who are engaged in high risk.
Impact due to GST on Fisheries
The following are the changes in taxes due to GST in the fisheries sector:
1. Most of the existing non-taxable items became taxable – fish products, fishing equipment like nets, hooks, ropes etc.
2. The tax rate of existing taxable items increased exorbitantly and some of the items were included in the highest category of 28% tax.
3. The highest category of GST were meant for luxury items but unfortunately the Marine Engines used by fishermen were also included in the same category. It means that GST for a BMW Car and Marine Engines for fishing are in the same category of 28% now.
Considering the above we feel that GST Council has to look into the anomalies of GST for fisheries sector and corrective measured will be taken in next GST council meeting scheduled for coastal city of Hyderabad.
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