This restructuring in various levies will, according to the Federation of Tea Traders' Association of Maharashtra, will lead to rise in tea prices to around Rs 10 per kg. According to federation president Harendra Shah the benefit of the set-off on the raw material is not available to tea traders, as blending and packing of tea does not amount to manufacturing as per the Maharashtra Sales Tax Act, while it is available during the value-added tax (VAT) system.''

"Sales tax on loose tea and packet tea has been made uniform at a higher rate of eight per cent in Maharashtra. As against that sales tax on tea in neighbouring state of Gujarat is only four per cent," he said adding that various states in their budgets have lowered sales tax.

Further, because of thedelay of rainfall in Assam, the prices of best Assam variety per kg at the Calcutta and Gauwahati in public option too have gone up from Rs 90-100 to Rs 140-160 per kg.

Traders having some old stock, are selling these at the earlier prices. "If the supply position does not improve by May, the prices of best Assam tea are likely to flare up," warned the federation.

Lastly, tea has been covered under the Essential Commodities Act. Federation president Shah has therefore demanded that tea should be included in the `declared commodity' list so that the sales tax on tea in all the states is levied uniformly at four per cent.

The federation suggested that sales tax on tea sold in pouches containing less than 25 gms of tea at nil rates; on more than 25 gms in the pouches the sales tax be reduced to four per cent from eight per cent, while sales tax on tea bags and flavoured and instant tea should be raised to 13 per cent from eight per cent and packet tea manufactured outside Maharashtra should attract salestax at 13 per cent instead of eight per cent.