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Journalism of Courage
MUMBAI, FEB 27: A two per cent levy on bulk teas for the first time ever has hit the tea industry hard. The trade off between the removal of the 8 per cent excise duty on packaged tea and the additional levy of 2 per cent on bulk teas is slated to affect the industry8217;s fortunes.
Top industry officials told The Financial Express that the present imposition of the two per cent duty coupled with the current low prices at the auctions and the government8217;s decision to allow for free imports of tea from Sri Lanka will ring the death knell for the industry. This would affect the south Indian and Cacchar tea industry in a major way.
The industry, critical of the move of the two per cent levy said that the high powered committee which is supposed to look into items carrying a zero duty should have talked to the industry before the imposition.
The tea industry prices have been hovering at lower levels of almost Rs 20 and Rs 30 for south and north India respectively over the corresponding period last year. With increasing costs of production, and threats of Sri Lankan imports at zero duty would seriously jeopardise the industry8217;s efforts for increasing productionand exports.
The industry has been critical on the government8217;s indifference of increasing the rate of deduction from 20 per cent to 40 per cent as part of Section 33 AB of the Income Tax Act.
The additional 20 per cent tax benefit would translate a total of 16 per cent cut in taxes for the industry. This would have been more relevant for the tea industry which carries a complicated dual taxation structure whereby 40 per cent is subjected to corporate income tax and the remaining 60 per cent is taxed by the state governments under their respective agricultural income tax acts.
