Chief Minister N Chandrababu Naidu on Wednesday hailed the Centre's latest move to scrap excise duty on unbranded, raw tobacco, calling it a major win for Andhra Pradesh’s farmers and small-scale traders. The decision, which zeroes out the duty on unprocessed tobacco under HS Code 2401, is expected to bring some much-needed simplicity to a tax structure that has long been a headache for the industry.
In a press release, Naidu pointed out that the lack of clear definitions in the past often led to messy disputes during audits and billing. Farmers and exporters frequently found themselves caught in a grey area owing to bulk transactions and commercial trade. With this new gazette notification — which went into effect on February 1 — the federal government has drawn a sharp line: if you're selling tobacco in bulk bags without a brand name, you pay zero duty. However, if it’s packed in small retail pouches or carries a company brand, the 18 per cent excise duty still applies.
Naidu believes this clarity will do more than just end paperwork nightmares; it should lead to better prices for growers and a more competitive edge for exporters. By making the supply chain for raw tobacco duty-free, the state hopes to see a boost in genuine trade while simultaneously making it harder for commercial brands to dodge taxes by pretending their products are "raw."
The state government noted that while this provides significant relief to the grassroots supply system, it won't hurt the overall revenue coming from branded commercial tobacco. For the farmers in Andhra’s tobacco belt, it's a welcome bit of news that promises a more transparent market and fewer legal hurdles.
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