Karnataka - Beedi industry seeks withdrawal of VAT
The beedi industry has taken strong umbrage to the
imposition of 5% value added tax (VAT) on sale of beedi
in the recent state budget. This comes close on the
heels of the Centre increasing excise duty on beedi in
the Union budget and wages paid to beedi workers, hike
in prices of raw materials and transportation cost. All
these factors have made the industry highly
uncompetitive, a press release issued by Bharath Beedi,
a beedi manufacturing company, here on Saturday stated.
The manufacturing cost has gone up manifold in the recent times.
It has become difficult to market the product competitively from Karnataka
mainly due to Kerala, Andhra Pradesh and West Bengal have exempted beedi
produced in their respective states from VAT, it stated. State governments
elsewhere in India impose 30 % to 40% VAT on beedi manufactured in Karnataka and
sold in their respective states, which acts as further dampener on sales.
With lakhs of people dependent on beedi rolling in the state, it is becoming
difficult for beedi manufacturing companies to give gainful employment to them
and the state government is further fuelling this process by levying additional
cess in the form of VAT, it added.Warning that such a step could prove to be
retrograde to the interests of the local beedi industry and lead to flight of
labour to other lucrative areas, the company on behalf of the Karnataka Bedi
Owners' Federation urged the state government to reconsider its decision of
levying 5% VAT on beedi produced in the state.
