The Hindu Business Line : Implement VAT for tea uniformly: Tea associations

MEMBERS of the Tea Association of India have written to the Chief Ministers of several State Governments and to Mr Kamal Nath, Union Commerce Minister, on their fears over non-implementation of VAT (value-added tax) by some States.

VAT should have been implemented uniformly throughout the country. As it has not happened, different rates in different States would foil the "noble objective" on the harmonisation of tax rates.

"As most of the States have opted for a four per cent VAT rate for tea, there is an apprehension that the unscrupulous dealers may find illegal ways of avoiding higher taxes. The disparity of tax rates would also lead to diversion of trade and consequently loss of revenue for some state governments," the members noted.

Tea Association of India also stated that the new tax rates would lead to an increase in the tea prices to the extent of Rs 15 a kg. This would adversely affect the budget of people because "tea is a poor man's drink".

Members of the association have written letters to the Chief Ministers of Andhra Pradesh, Bihar, Haryana, Maharashtra, Orissa and Punjab to impose a VAT rate of four per cent on tea.

Our Kochi/Coimbatore bureaus report: Classification of tea under Revenue Neutral Rate (RNR) of 12.5 per cent in few States would lead to higher consumer price for tea in these States thereby affecting consumption, according to Mr Anil Kumar Bhandari, President, United Planters' Association of South India (Upasi).

Tea is acknowledged to a common man's drink in the country and any hike in price due to increase in tax would have a direct impact on the weakest of weak of our society, Mr Bhandari said.

"A 12.5 per cent VAT rate will effectively result in 16 per cent tax at the consumer-end as against the current rate of 8 to 10 per cent in most States. Being a poor man's drink, the higher rate as proposed by some of the consuming States will affect consumption,'' said Mr C. Sankarnarayanan, adviser, Planters' Association of Tamil Nadu. The producers could ill-afford a higher burden on account of VAT, when the industry was passing through financial crisis, he added.

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