Amaravati, Andhra Pradesh Chief Minister N Chandrababu Naidu on Wednesday welcomed the decision to reduce excise duty on unbranded raw tobacco products to zero percent, saying it would benefit farmers and small traders in the state.
Zero excise duty on unbranded raw tobacco to benefit farmers, traders: Andhra CMThe Chief Minister said that this move will bring transparency and clarity in tax on unprocessed tobacco under HS Code 2401.
“The decision to impose zero excise duty on retail sale of unbranded and unpackaged tobacco is an important step that will directly help tobacco farmers, traders and exporters in Andhra Pradesh,” Naidu said in an official press release.
Union Finance Ministry has issued the Gazette Notification to ensure uniformity in duty structure and remove confusion between bulk unbranded tobacco transactions and commercial trade.
The Center has clarified that the 18 per cent excise duty will be applicable only on retail sale or tobacco packed in small packets bearing the company’s brand name, the press release said.
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Naidu observed that the lack of clear distinctions in the law created difficulties for farmers and traders, leading to disputes during audits and billing.
The new notification, effective from February 1, will reduce such problems and prevent excise duty evasion, he noted.
The Chief Minister emphasized that the decision would strengthen exports and trade as well as ensure better prices for farmers.
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Tobacco sold in bulk bags by farmers without branding will attract zero duty, while branded or retail-packed tobacco will continue to be taxed at 18 percent, the press release said.
The state government said it would relax the raw tobacco supply system without affecting revenue from commercial products, it said.
The state government maintains that the new guidelines will also prevent misuse in the name of selling raw tobacco and ensure that only genuine non-branded products get tax benefits, the press release added.
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