TDS anxiety for tea gardens
Tea planters in Bengal have expressed concern over the sustenance of a number of gardens because of financial stress caused by low yields and high cost incurred by the Centre’s decision to impose a 2 per cent tax deductible at source on all cash drawings over Rs 1 crore.
In the budget, finance minister Nirmala Sitharaman had announced that in a bid to encourage cashless transactions and digital payment formats, TDS would be levied on drawings above Rs 1 crore from September 1.
“This decision has left the tea industry in a soup as we have to disburse the wages of lakhs of workers and even the salaries of the staff in cash. After the demonetisation in 2016, an attempt was made to encourage cashless payments in tea gardens but even today, almost all the gardens pay in cash as proper banking infrastructure has not come up in most estates,” said Prabir Bhattacharjee, the secretary-general of the Tea Association of India (TAI).
According to him, tea planters’ associations have time and again told the Centre about their problems and sought a TDS waiver.
In north Bengal, there are around 300 tea estates spread across Darjeeling, the Terai and the Dooars, employing over three lakh workers.
“Many gardens have been bearing additional expenditure on account of the TDS since September. We are apprehensive about the sustenance of a number of gardens which are already facing financial duress,” Bhattacharjee said.
After the TDS on cash drawings was announced, representatives of the TAI had made calculations keeping in mind the current daily wage rate of Rs 176 and the salaries of staff.
“Even a conservative estimate showed that a garden that employs 1,000 workers would have to shoulder an annual additional expenditure of Rs 11 lakh on account of the TDS,” a source said.
According to the source, on paper a 2 per cent tax may not look a huge amount but for the ailing tea gardens it is resulting in an additional burden.
“Had the plan of creating proper banking infrastructure in tea gardens been implemented, we would not have demanded a waiver,” the source said.
After the demonetisation, the Payment of Wages Act, 1936, was amended and it was announced that wages would be paid through cheques or credited in the workers’ bank accounts.
This made it imperative for the employers to disburse wages digitally or through banks. A flurry of activity followed and meetings were held to facilitate the process in tea gardens. It was agreed that banks would set up infrastructure, at least ATMs and micro ATMs, in tea gardens by March 31, 2017.
“The process of establishing the required infrastructure, however, did not materialise for a number of reasons, among them connectivity and logistics. As the progress (of setting up such facilities) remained tardy, gardens had to switch back to making payments in cash,” said a tea planter based in Siliguri.
Darjeeling MP and BJP leader Raju Bista on Friday met Jitendra Singh, the minister of state in the Prime Minister’s Office, and discussed “important issues” that included the rights of tea garden and cinchona workers, including minimum wages, and a “permanent political solution” on the hills.