Date:12/04/2006 URL: http://www.thehindubusinessline.com/2006/04/12/stories/2006041203311400.htm

Back Tea price likely to rise by Rs 10-20 in Maharashtra

Our Bureau

Notification restoring old VAT rate of 4 per cent not issued yet

It is feared that the tea business would shift to neighbouring States and deprive lakhs of people of employment opportunity.

Mumbai , April 11

Tea prices may increase by Rs 10-20 per kg (both in loose and packed form) in Maharashtra, if the State Government does not restore a uniform rate of 4 per cent VAT from the existing 12.5 per cent.

The Maharashtra Government has so far not issued any notification to restore the old VAT rate, which has increased to 12.5 per cent on tea effective from April 1.

The State had levied 4 per cent VAT on tea for 11 months effective from May 1, 2005 to March 31 this year.

"Consumers of Maharashtra will have to pay more for tea as compared to other States in the country," Mr Harendra Shah, President - Federation of Tea Traders Association of Maharashtra (FAITTA) and chairman of VAT Committee of FAITTA told reporters.

Bandh organised

The federation had on Tuesday organised a bandh to oppose the 12.5 per cent VAT on tea. In addition, the Federation of Maharashtra Tea Traders Association will boycott tea auction at all tea centres in India.

"Out of 26 states, 22 have implemented 4 per cent VAT on tea. Besides, they have listed tea in Schedule II of their VAT Bill. Only Maharashtra and Andhra Pradesh have implemented 12.5 per cent VAT on tea," Mr Shah said.

All four neighbouring states — Gujarat, Madhya Pradesh, Goa and Karnataka — implement 4 per cent VAT on tea.

"Maximum retail price (MRP) on tea in neighbouring states will be lower, while in Maharashtra it will be higher by Rs 10-20 per kg.

"Thereby well-known brands of tea will be smuggled into Maharashtra by unscrupulous traders and it will be easily distributed to the re-sellers," Mr Shah said.

Fear shift in business

It is feared that the Maharashtra tea business would shift to neighbouring states and deprive lakhs of people of employment opportunity.

In addition, major players like Tata Tea, Hindustan Lever and multinational companies will find it difficult to sell packaged tea due to the difference in VAT rates