Assam tea industry seeks tax sops, other reliefs

Mumbai, Feb 14 : Faced with rising cost of inputs and prolonged low price realization for the past few years, the tea industry has asked the Assam government for some tax relief in the next budget. In a pre-budget memorandum submitted to the Assam government, the Indian Tea Association, which is an organization of leading planters of Brahmaputra and the Barak Valley of Assam, has mentioned that the crisis-ridden tea industry in Assam merits continued attention and measures from the state government to help it recouping accumulated losses and sustaining operations.

According to a report from Guwahati, the industry has made request for some specific relaxation on different types of taxes imposed on it in the state of Assam having over 800 tea estates. The ITA has requested for increase in deduction of agricultural income tax on tea exports from the state to the level of Rs 6 per kg from the existing rate of Re1 per kg. In fact, ITA has asked for total withdrawal of agricultural income tax on tea in Assam as has already been done by governments in Tamil Nadu and West Bengal to provide relief to the industry. If total withdrawal is not possible, the government should at least consider a moratorium on agricultural income tax on tea for at least six years.

The industry has also asked for certain relaxation of VAT rates in respect of tea sold through the Guwahati Auction Centre as well as on non-auction sale. Moreover, the tea industry, which is bound by the existing Plantation Labour Act to provide food grains and cereals at highly subsidised rates to over 6 lakh tea workers and their families, has asked for a zero VAT regime for the purchase of such cereals and food grains from government allocations.

High tax rates hit Assam tea sector

GUWAHATI, Dec 28 : Tea industry in Assam has always been the victim of unaffordable level of State taxes and levies, which are the highest among all the tea-producing States in the country, said Shashank Prasad, president of the Tea Association of India (TAI). He also called for structural reforms in the industry to face the challenges. Addressing the 29th annual general meeting of the Assam Branch of the TAI at Jorhat today, Prasad said that the Government of Assam recently increased land revenue in the Brahmaputra Valley from Rs 10 to Rs 22 per bigha, that too with a retrospective effect of five year. In addition, the green leaf cess of 32 paise per kilogram has been imposed, while, all the other tea producing States withdrew it. He called upon the State Government to review the steep hike of land revenue rates to bring it to moderate level.

The TAI president said that the Special Purpose Tea Fund (SPTF), introduced by the Government of India to provide financial assistance to the fund starved tea industry, is yet to see the desired results. He pointed out that the utilization of the scheme remained below the desired level and called upon the planters of Assam to take up re-plantation programme at the right earnest. He also called upon the authorities concerned to review the procedural formalities for sanction and disbursement of funds, specially for the small and single-estate companies. He also said that the prolonged recession taught many lessons to the industry. “The industry has to be competitive to survive. The competitiveness can only be obtained by radically increasing productivity, both of land and labour. Substantial improvement of quality is also vital for the industry,” he added.

Prasad admitted that structural reforms in the tea industry was long overdue and said that the Plantation Labour Act should be reviewed immediately. He pointed out that the archaic provisions of the Act were lo longer valid in the modern times and said that the Government should take the burden of some of the social costs of the industry. He said that a large number of tea gardens of Assam have to bear substantial amounts to maintain the Assam Tea Plantation Security Force and under the present circumstances, the State Government should now bear the cost.

The TAI president asserted that the tea industry was determined to protect the employment of its existing employees, even when the cascading effect of the global recession adversely affected job security in several labour intensive industries in India. However, at the same time, he said that it might not always be possible to accede to the demands and aspirations of the employees at present.

Though after a long and unprecedented recession, tea prices increased this year, Prasad said that the global economic meltdown and slowdown of exports meant that the initial gains could not be maintained. He, however, welcomed introduction of E auctioning, which would help both the producers and buyers in the days to come.

The TAI president further said that the surge of bought leaf factories exposed the organized sector to an unequal and unfair competition as the small growers and the bought leaf factories are not shouldering the burden of the social costs.