Cut In Sales Tax On Loose Tea Welcomed

Tea traders in Maharashtra have welcomed the reduction in sales tax on loose tea to four per cent from eight per cent in the state budget.

However, they have expressed disappointment as the reduction in sales tax has not been extended for packed tea. Harendra Shah, president, Federation of Tea Traders Association of Maharashtra (FTTAM), in a memorandum to the state finance minister, Mahadev Shivankar, said there is some misunderstanding that loose tea is consumed by middle class and the poor, while packet tea is consumed by the upper class.

Like sugar, wheat and onion, tea is also an essential commodity, whether sold in loose or in packet, he added. He said in India loose tea and packet tea is equally consumed.

The only difference is loose tea is packed after sale at the retail counters, while packet tea is packed prior to the sale.

According to the memorandum, packet tea of 25 grams and 50 grams are priced at 50 paise and Rs two, respectively, and are generally sold in small grocery shops as well as pan-bidi shops.

Consumption of such tea packets are very high in slum areas.

Shah said if the tea manufacturing companies in the state revert to loose tea from packet tea for the sake of tax benefit, about 4,000-5,000 workers who are engaged in the packet tea industry may lose employment.

In Maharashtra, there are a number of local packet tea manufacturers like Girnar and Hasmukhrain & Co in Mumbai, Sapat Tea in Nasik; GS Tea in Sangli; Madhur Tea in Pune.

The marketshare of these companies is equally good with the multinational companies like Hindustan Lever (Brooke Bond and Lipton).