The Hindu : Business : UPASI seeks uniform VAT for tea

Online edition of India's National Newspaper
Wednesday, Apr 27, 2005

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UPASI seeks uniform VAT for tea

Special Correspondent

Should be classified under 4 p.c. schedule

The classification of tea under 12.5 per cent category in a few States would deny "level playing field" for consumers and traders.

COIMBATORE: The United Planters' Association of Southern India (UPASI) has pleaded for a uniform value added tax (VAT) rate for tea throughout the country.

In a statement, Anil Kumar Bhandari, President of the association, said the recommendation of the Empowered Committee on VAT giving option to States to classify tea under either 4 per cent or 12.5 per cent category had resulted in a few important consuming States fixing VAT for tea at the "revenue neutral rate" of 12.5 per cent. "This will lead to higher consumer price for tea in these States compared to others thereby affecting consumption".

Tea was an acknowledged common man's drink in India and any hike in price of this commodity due to increase in tax would have direct impact on the "weakest of the weak", he said. Besides, tea being a mass consumption item, any increase in price would lead to inflationary trend in the economy, he contended. According to him, the classification of tea under 12.5 per cent category in a few States would deny "level playing field" for consumers and traders. This could lead to unhealthy trade practices. Hence, he pleaded that tea should be classified under 4 per cent schedule of VAT rates so that there would be a uniform rate throughout the country.

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