40% Drop In Business Due To High VAT Rate In AP
The Federation of All India Tea Traders Association (FAITTA) and Indian Tea Association (ITA) appealed today to the Andhra Pradesh Government to implement uniform VAT rate of four per cent on tea as recommended by the Empowered Committee (EC) of state Finance Ministers.
While this recommendation was accepted by many States including West Bengal, Assam, Delhi and Karnataka, Andhra Pradesh was still to implement it, leading to a 30-40 per cent drop in business in the state, tnhey said, adding, as a result, tea, an acknowledged common man’s drink in India, would now become dearer.
The associations said in a joint statement that classifying tea under 12.5 per cent category in a few States would deny level playing field for consumers and traders, which could lead to unhealthy trade practices. The high rate of VAT within the State of AP had resulted in increasing cross-border infiltration from neighbouring states, which had cheaper VAT rate on tea. Landed price of tea in states placing tea in 12.5 per cent category was expected to be over 16 per cent, which might result in price hike by 8-12 per cent, amounting to a rise of Rs 10-20 per kg compared to neighbouring states.
With 40 per cent of market under “loose tea” small and local traders would be adversely affected and the State would lose business in the long term, they said.