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Government Proposes VAT Subsidy for Diesel on Fishing Vessels

INDIA - The state government has modified the scheme regarding the grant of value added tax-based (VAT) subsidy on high-speed diesel (HSD) for fishing vessels to provide them relief from losses on operational costs.

The government has plans to implement the scheme from the current financial year 2012-13, considering the increasing operational costs incurred by the fishing vessels due to the constant rise in HSD oil prices, reports TimesofIndia.

"The cost of the fuel constitutes 60 per cent of the operational cost of a fishing vessel," a source stated.

A few other factors, especially the depletion in marine resources and the uncertain catch, induced the government to modify the scheme. "The diesel prices are increasing but the quantum of fish catch has not shown any significant increase," the source stated.

The introduction of VAT also increases the total tax and owners of fishing vessels had been demanding the exemption of VAT as sales tax. Earlier, sales tax had been waived off before VAT was introduced.

However, as there is no provision in the Goa Value Added Tax Act, 2005 to exempt payment of VAT by the owners of fishing vessels, the government decided to grant subsidy on VAT payments made by fishing vessels on consumption of HSD oil. But only fishing vessels registered under the Goa, Daman and Diu Marine Fishing Regulation Act, 1980, and members of a registered co-operative society with valid net and fishing licences are eligible for the subsidy. The owners will have to procure HSD oil from diesel outlets run by the registered fisheries cooperative society or government-approved ones.

The quantum of subsidy will be equivalent to the actual VAT paid by the vessel owners under this scheme on the fuel consumed by the vessel for fishing, but the total quota will be restricted to 20,000 kls for the entire fishing industry. The fisheries department has framed conditions for fishing vessels to avail of the subsidy.

Lucy Towers

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