 "Assam tea industry demands concessional tax rate under GST")
The financially hard-pressed Assam tea industry has demanded that tea be kept under a concessional tax rate of five per cent under Goods and Services Tax (GST) rules, which are being currently evaluated and drafted by an empowered committee. GST may come into effect from April 2017 and the industry is of the view that any rate of taxation on tea that is higher, will have a “very adverse impact” on the sector.
According to the tea industry, 70 per cent of its input costs consist of workers’ wages, which do not qualify for credit inputs. So it wants tea not be clubbed with other manufactured goods and products while finalising tax rates. It wants tea to be considered as a product of mass consumption, like flour, pulses and salt and enjoy the lowest slab of five per cent.
A joint forum of the Assam tea industry, consisting of Assam Tea Planters’ Association (ATPA), North Eastern Tea Association (NETA) and Bharatiya Chah Parishad (BCP), today submitted a memorandum to Assam finance minister Himanta Biswa Sarma, who along with other state finance ministers is a member of the empowered committee on GST. Through the memorandum, the tea bodies gave point-by-point reasons as why taxation of tea under GST needs to be concessional.
The industry cited the example of concessional tax slab for tea under the Value Added Tax (VAT) regime, which was taken after due deliberations, it claimed.
“Initially tea was to be included in revenue neutral rate (RNR) of 12.5 per cent VAT, but after deliberation it was prudently considered as a product of mass consumption like, flour, pulses and salt and the lowest slab of five per cent was imposed on it,” the memorandum added.
The industry said in past it could not sustain the imposition of a one-rupee-per-kg excise duty on its produce and this tax had to be kept in abeyance by the Centre for past few years.
The memorandum said tea industry was highly labour intensive and was presently facing a crisis because of falling production in its tea estates. The decline in production, it said, had been due to older plantations and because of the impact of change in weather conditions, coupled with pest attacks.
It also said that the tea market is regulated by the packeting industry and blenders and it was difficult on the part of Assam tea industry to pass the burden of higher cost on to the buyers. “Most tea estates are financially hard pressed due to the increase in input costs and stagnating demand, which was resulting in lower price realisation,” it said.
A survey conducted by the Indian Market Research Bureau indicated that tea was consumed by 91 per cent of the population and that 12 lakh labourers work on tea plantations. Besides, double that number is involved in ancillary activities.
