Bidi makers voice concerns at VAT, tax burden in MP

Bidi manufacturers of Madhya Pradesh have once again voiced issues and concerns over value added tax (VAT) apart from migration at a fast pace, the licence regime and the general heavy tax burden.

MP levies tax at 26.06 per cent on bidi (made from tendu leaves, botanically known as Diospyros melonoxylon) manufacturers who make 20 lakh bidis each year.

"The tax is as low as 4 per cent in Bihar, Karnataka, Jharkhand, Uttar Pradesh, Orissa and West Bengal," a spokesperson of the Madhya Pradesh Bidi Udyog Sangh said.

Sangh said bidi manufacturers were migrating from MP due to sloppy laws and typical documentation processes of the forest department. Bidi manufacturers have to surrender transport permits to collect tendu leaf delivery.

Further, a manufacturer is supposed to file another application for a second transport permit to transfer the collected tendu leaves to his manufacturing unit. The task does not end here. The manufacture has to apply further for third licence to distribute tendu leaves among labours/punters to make bidis.

"Multiple verifications from a forest ranger are necessary during the transport permit obtaining process," said the spokesperson.

Interestingly, the Department of Forest registers tendu patta traders in two categories, namely manufacturer and exporter. A tendu patta exporter is exempted from tax on intra-state exports.

In case he supplies tendu leaves to state bidi manufacture, the forest department levies a transfer tax at the rate of 17 per cent per standard sack. "We have asked the state government to reduce it to 1 per cent," the spokesperson added. The state forest assured the Sangh rules would be simplified.

MP is the biggest tendu leaf (leaves of diospyros melonoxylon) producing state of the country. The average annual production of tendu leaves in MP is around 25 lakh standard bags, which is nearly 25 per cent of the total tendu leaves production of the country.