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The United Planters' Association of Southern India (Upasi) has urged Finance Minister, Mr Pranab Mukherjee, to include the subsidy scheme for production of orthodox tea under the ambit of Section 10(30) of the Income Tax Act, 1961 so that the subsidy from Tea Board is not treated as part of total income.
Mr D. Hegde, President of Upasi, who led the association's delegation said: “We have requested the Finance Minister for inclusion of the subsidy scheme under Section 10(30) making it eligible for exclusion from the total income as applicable in the case of replantation/replacement/rejuvenation subsidy.”
“The orthodox production subsidy, as in the case of replantation/rejuvenation subsidy, is revenue in nature and is also disbursed through the Tea Board.
"Hence orthodox production subsidy should be justifiably entitled to be exempted from total income under Section 10(30) of the Income Tax Act, 1961,” he added.
To encourage production and meet export demand for orthodox teas, the Union Government introduced ‘Orthodox Production Subsidy Scheme' from January 1, 2005.
The scheme, through Tea Board, provides for subsidy to the tea growers and manufacturers to boost production of high quality orthodox teas. Mr Hegde said that while computing total income under the I-T Act of an assessee who carries on the business of growing and manufacturing tea, the amount of any subsidy received from or through the Tea Board under the scheme for replantation or replacement of tea bushes or for rejuvenation or consolidation of areas used for cultivation of tea is not included as part of total income according to the provision of Section 10(30) of the act.
SERVICE TAX
The association has also sought exemption of service tax on storage and warehousing services for plantation crops.
Service tax on storage and warehousing services was introduced from August 16, 2002 under Section 149 of the Finance Act 2002.
However, services provided in relation to agricultural produce were kept outside the ambit of the levy, said Mr Hegde.
According to the order, ‘Agricultural Produce' means any produce resulting from cultivation or plantation, on which either no further processing is done or such processing is done by the cultivator like tending, pruning, cutting, harvesting, drying which does not alter its essential characteristics but makes it only marketable and includes all cereals, pulses, fruits, nuts and vegetables, spices, copra, sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute, etc. indigo, unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee and tea but does not include manufactured products such as sugar, edible oils, processed food, processed tobacco.
“It is amply clear that tea is exempted from the ambit of service tax under the storage and warehousing services. However, some of the field offices of the Excise Department are insisting on the service tax on tea warehoused.
This has caused considerable difficulty for the tea sector in warehousing the product.
Hence it is requested that a clarificatory notice be issued to the field formation that no service tax on storage and warehousing on tea be levied,” Mr Hegde said.
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