The Hindu Business Line : Corporate tea sellers not eligible for cut in VAT in TN

Coonoor June 1 Corporate sellers of tea are disappointed that the last week's reduction of the value added tax (VAT) is not applicable for the produce they sell.

The Tamil Nadu Chief Minister, Mr M. Karunanidhi, announced on May 23 that VAT on the teas sold in Coonoor and Coimbatore auctions would be reduced to one per cent from the current four per cent.

In the first auctions to be conducted by the Coonoor Tea Trade Association (CTTA) after the reduction last Friday, some inter-State buyers and exporters showed keen interest to operate at the reduced VAT.

But now, the notification issued by the Government has disappointed the corporate sellers, as the reduction is not applicable for their teas.

The notification says that in exercise of the powers conferred by Section 30 (1) of the TN VAT ACT, 2006, the rate of VAT payable for the sale of tea manufactured by private bought-leaf factories and the TN Small Tea Growers' Industrial Co-op Tea Factories' Federation Ltd (Indcoserve) at the tea auction centres of Coonoor and Coimbatore or direct first sale by them has been reduced from 4 per cent to one per cent. The new rate has come into effect from May 24.

So, the teas manufactured by companies are not eligible for the lower rate.

Auctioneers said some buyers had cancelled their orders when they realised that the teas they had bought would attract more VAT.