Tea industry seeks special rate under GST

The tea industry has sought a special tax rate under the new GST regime as it will have an impact on the livelihood of poorer sections of the society.

“We have voiced our concerns,” Arijit Raha, Indian Tea Association Secretary General, told The Hindu . The current tax rate for tea sector is between 5.5 and 6 per cent. As against this, the lowest rate proposed in the GST is 12 per cent for “low” rate goods which would be applicable for tea.

The apex industry association has already urged the Centre to consider their request. Under the current tax structure, various concessions/ benefits are provided both by the Centre and the State to tea sector. These benefits are in the nature of exemption from excise duty payment and lower VAT rates on tea across all states (including concessional rates for teas sold through auctions).

Government’s attention was also drawn to the labour-intensive nature of the plantation-based industry, which provides livelihood to people, many of whom are poor and economically weak. Tea industry provides direct employment to more than 1.1 million – half of whom are women. This apart it also looks after three million dependents who reside at the tea estates.

“The government had favourably considered the industry’s position during the period of transiting from sales tax to value added tax too,” Mr Raha said.

Saddled with a host of problems, ranging from ageing tea bushes to climate change, the more than century-old industry fears the withdrawal of its benefits. “A rise in tax incidence could fuel inflationary pressures, affecting consumer demand. This would have adverse effect on the sector’s economic viability as well as the sustenance of the large workforce” employed by the sector, Mr. Raha said.

Besides a lower GST rate band, the sector also wants a concessional rate of 0.5-1 per cent for teas sold through auctions and waiver of 1 per cent additional tax on interstate supplies of goods.

The industry faces a host of problems, ranging from ageing tea bushes to climate change

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