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Auction tax: no cheer for tea industry

Special Correspondent

KOLKATA: The tea sector is disappointed over the budget proposal to bring auctioneering under the service tax net.

The apex industry body, Indian Tea Association, accounting for 80 per cent of India's tea production, said that tea was pre-dominantly sold through public auctions and a service tax would substantially increase the cost of buying through the auction channel.

Tata Tea said this move would adversely impact the industry's cost structure as the industry was unable to avail itself of setoffs considering that there was no excise duty or service tax on outputs payable by tea companies. Tata Tea has said that the reduction in customs duty on packaging machines from 15 per cent to five per cent would help innovate and create new packaging avenues.

However, the ITA and the tea plantation industry have welcomed the proposal on the government's plan to invest Rs. 100 crore in the special purpose tea fund for replanting and rejuvenation.

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