That cutting chai outside your office or at the railway station may become dearer. Tea prices are set go up by Rs20 or Rs30 from April 1, if the state government fails to extend a notification.
Tea falls under Schedule-C category of VAT, and as such a VAT of 4% is applicable. But this notification is applicable till March 31. From April 1, tea will cease to be a part of Schedule-C and therefore will fall under the residue head. This will attract a VAT of 12.5 %.
Harendra Shah, president of Federation of Tea Traders Association of Maharashtra and the chairman of Federation of All India Tea Traders Association, said if such a thing comes into existence, it will affect the common man.
“Tea prices will definitely go up. The medium quality tea which is priced at Rs180 to Rs200 per kg would shoot up to Rs200 to 220 per kg. Premium tea which is priced at Rs300 to Rs320 per kg would rise to Rs325 to Rs350 per kg,” said Shah.
The federation had submitted a memorandum requesting the government to extend the notification. The memorandum said the government should make an announcement in the ensuing budget to ensure that tea prices do not rise.
The state increased the VAT on food items, including tea from 4% to 5%. If the notification is not extended, a VAT of 12.5% will be applicable on tea, said Shah.
