The Hindu Business Line : Plea for uniform VAT rate for tea rejected

THE Empowered Committee of State Finance Ministers on Value Added Tax (VAT) has poured cold water on tea industry's demands for a uniform 4 per cent VAT rate on tea.

The VAT panel does not see the current trend of variation in VAT rates on tea as a "deviation" from its agreed decision. While most States have pegged their VAT rate on tea at 4 per cent, there are some who have pegged it at 12.5 per cent.

While the tea-producing States favoured a 4 per cent VAT rate, the tea consuming States had gone in for a 12.5 per cent rate.

"In the case of tea, the VAT rate has been brought down to 4 per cent. States have always been free to charge a higher rate. This is not a deviation. But States doing it is few and far between," Dr Asim Dasgupta, Chairman of the Empowered Committee, said.

India produces more than 800 million kg of tea in a year. Waving the "drink of the common man" card, the tea industry had been suggesting that the VAT rate on tea should be a uniform 4 per cent and not 12.5 per cent as adopted by certain States. Industry has been highlighting that States such as Andhra Pradesh, Bihar, Orissa, Haryana and Goa were yet to implement the 4 per cent VAT rate.

Dr Dasgupta maintained that "deviations" in the VAT regime have not been significant at all although some were witnessed in items such as salt and foodgrains.

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