Tea Traders Association of Coimbatore today appealed to the Centre to exempt tea from levy of GST, and be removed from the list of taxable items under the GST Act.

If total exemption was not possible, tea should at least be exempted from GST at first point sale made in the public tea auction centres, licensed by the Tea Board of India. For subsequent sales, the rate should not exceed five per cent, the association chairman, UV Saraf said.

In his address to the 34th Annual General Meeting of the association in Coimbatore, Saraf said that while welcoming the introduction of GST from April 2017, the members are worried that tea will fall under the category of 18 percent Revenue Neutral Rate. Presently, VAT is charged at five percent for estate teas and at a concessional one per cent rate for Bought Leaf Factory teas in Tamil Nadu, he said.

He appealed to the lawmakers to take up the matter with the state and Central governments to
get total exemption or minimum GST rates for auction sales throughout the country, since tea is an agricultural produce of mass consumption, next to water.

On the implementation of pan-India e-auction system of tea, which came into force last June, Saraf said that although the association wanted participation of more buyers, certain inflexible rules introduced by the Board in the new system created numerous operational difficulties to many small and medium buyers participating in the auction system.

Pointing out that less than 50 per cent—below 600 Million kilos — of the total Indian Tea production (1,200 Million kilos) was sold through the e-auction system, Saraf said that some minor changes will make the pan-India e-auction system much more popular.

By this, more quantities will be offered by tea manufacturers and the volume might go up even to 70 per cent, Saraf said.