Amaravati, Andhra Pradesh Chief Minister N Chandrababu Naidu on Wednesday welcomed the Centre's decision to reduce excise duty on unbranded raw tobacco products to zero per cent, stating that it would benefit farmers and small traders in the state.
The chief minister said the move would bring clarity and transparency in taxation on unprocessed tobacco falling under HS Code 2401.
"The decision to impose zero excise duty on retail sales of unbranded and unpacked tobacco is a crucial step that will directly help tobacco farmers, traders and exporters in Andhra Pradesh," Naidu said in an official press release.
The Union Finance Ministry issued the gazette notification to ensure uniformity in duty structure and to remove confusion between bulk unbranded tobacco transactions and commercial trade.
The Centre clarified that 18 percent excise duty would apply only to tobacco packed in small packets for retail sale or carrying company brand names, said the press release.
Naidu observed that earlier lack of clear distinction in the law had created difficulties for farmers and traders, leading to disputes during auditing and billing.
The new notification, effective from February 1, would reduce such problems and curb evasion of excise duty, he noted.
The chief minister asserted that the decision would ensure better prices for farmers while strengthening exports and trade.
Tobacco sold by farmers in bulk bags without branding will attract zero duty, while branded or retail-packed tobacco will continue to be taxed at 18 percent, said the press release.
The state government said this would provide relief to the raw tobacco supply system without affecting revenue from commercial products, it said.
The state government maintained that the new guidelines would also check misuse in the name of raw tobacco sales and ensure that only genuine unbranded produce receives tax benefit, the press release added.
Source Name : Economic Times