Zero Duty on Raw Tobacco Products Will Benefit AP Farmers: Naidu
As farmers and traders were losing money due to unclear policies, a decision was taken to reduce the duty on unbranded products to zero percent
Vijayawada: Chief Minister N. Chandrababu Naidu welcomed the Union Government’s decision to reduce excise duty to zero on unbranded raw tobacco products, stating that the move would significantly benefit tobacco farmers, small traders and the unorganised tobacco trade in Andhra Pradesh.
Naidu said the state government has taken note of the gazette notification issued by the Union finance ministry, which clarifies the excise duty structure applicable to unprocessed tobacco falling under HS Code 2401.
As per the notification, excise duty on unbranded, unpackaged raw tobacco sold at the retail level has been reduced to zero with effect from February 1.
The CM described the decision as a crucial reform that would bring much-needed clarity, uniformity and transparency in the taxation of tobacco products. Earlier, the absence of clear distinctions between bulk unbranded tobacco trade and other forms of tobacco commerce had led to confusion, frequent disputes and financial losses for farmers and traders due to varying legal interpretations.
With the latest notification, problems arising from multiple classifications in excise duty assessment would be minimised, he said.
Naidu noted that farmers generally sold raw tobacco in bulk without branding or packaging. Such transactions would now be completely exempt from excise duty, directly benefiting cultivators through price realisation.
The notification, however, makes it clear that tobacco products packed in small retail pouches, or those bearing company brand names, would continue to attract 18 per cent excise duty. The finance ministry stated that this differentiation would ensure that government revenue from commercial and branded tobacco sales remains unaffected, while genuine agricultural trade is protected.
The state government said the revised excise framework would also curb misuse of the ‘raw tobacco’ category by branded retailers and reduce disputes during auditing and billing. Naidu said clearer guidelines would significantly check tax evasion and prevent wrongful availing of tax benefits.
The Chief Minister said the Andhra Pradesh government has urged the Centre and the central board of indirect taxes and customs to ensure strict and uniform implementation of the notification across the country, stating that the decision would provide long-term relief to tobacco farmers and small traders in the state.
