The leaders of the United Planters Association of Southern India (Upasi), representing tea, coffee, cardamom and rubber estates, on Friday met defence minister George Fernandes, finance minister Jaswant Singh, labour minister Sahib Singh Verma, MoS for commerce RP Rudy and MoS for urban development O Rajgopal, and pleaded for major changes in the taxation structure to bail them out of the prevailing crisis.
Upasi president PS Wallia told the press after the meetings that drought has hit both output and exports. Market prices are ruling below the cost of production further aggravating their woes. The Centre should, therefore, correct the anomalies in the tax regime, including exemption from excise duty on tea.
He said the average market price of tea now is Rs 47 a kg as against the cost of production of Rs 60 a kg, and that if the small growers are taken into account, the overall average auction price is as low as Rs 41 per kg, indicating that even the excise duty paid is not passed on to the consumer in the over-supply situation. Therefore, the government should remove the one rupee excise duty on the product as it is done for exporters so as to provide relief to growers, he said.
The division of income from tea plantations into agricultural and business in a 60:40 ratio and imposition of tax on it at 50-65 per cent and 35 per cent respectively has also affected the growers, he said, adding their confusion was compounded by bringing coffee and rubber into its fold early this year.
Mr Wallia also urged the government to take effective steps such as curbing excise duty, social welfare costs, agricultural income tax, eliminating double taxation and preventing unhealthy competition from cheap imports.
Last year 23 tea companies incurred a total loss of Rs 79 crore in the South alone and these companies accounted for 70 per cent of the estate tea production in the region.
Double taxation of some grades of rubber which were earlier categorised as farm products but later brought under the fold of Central income tax has increased the woes of rubber farmers. He said for taxation, plantation crops should be treated only as agriculture and not as an industry. Plantation crops should be exempted from farm tax like other agri crops. At present farm tax on plantation estates is very in different states.