<p></p><p>Sikakulam has the reputation of being one of the less developed districts in Andhra Pradesh but it hosts a thriving cashew industry in the town of Palasa. It’s an industry with a turnover of Rs 1,200 crore. Yet, the commercial taxes department is struggling to rake in a decent sum from it. Traders tend not to maintain records in this business and underinvoicing is routine.As many as 400 units are involved in the cashew business in this district. Traders with a turnover of less than Rs.5 lakh per year are exempt from taxes. The tax is around 1 per cent for turnover up to Rs. 50 lakh and 5 per cent if produce is exported to other States.<br></p> <p>A majority of the traders report turnovers less than Rs.5 lakh per year. And many of the others don’t file even income tax returns. The Commercial Taxes Department estimates that tax evasion by the cashew trade amounts to about Rs 50 crore every year. After years of wringing its hands, the department is poised to step up its inspections in Palasa, Haripuram and other cashew towns from next week.Traders, however, have their own sad tale to tell. Palasa Cashew Manufacturing Association president Malla Srinivasa Rao told The Hindu that many units would shut operations if they were forced to pay heavy taxes. Many of them are in a crisis due to the bifurcation of Andhra Pradesh last year. They now have to pay hefty taxes as shipments to Hyderabad are now taxable unlike before. <br></p> <p>There have also been financial strains due to the adoption of new technology made mandatory by the AP Pollution Control Board, a recent hike in wages and upward revision of cashewnut prices are also denting the margins of traders.“The department suspects underinvoicing of exports. Byt they should understand that the price of cashew ranges from Rs.180 to Rs. 550 per kg depending on quality. So there will be variation of values,” Mr. Srinivasa Rao said.Local political leaders are putting their weight behind the traders, saying the industry is already in crisis and frequent inspections and seizure of goods would only lead to closure of many units in Palasa and Haripuram. <br></p><p>Many units will shut operations if they are forced to pay heavy taxes<br></p> <p>Malla Srinivasa Rao <br></p> <p>President of Palasa Cashew Manufacturing Association <br></p> <p>Rs.50 crore taxes evaded every year, say officials <br></p> <p>Commercial Tax department will continue its inspections<br></p><p></p>