IAS Gyan

Daily News Analysis


21st February, 2023 Economy

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  • The GST council meeting chaired by Union Finance Minister Nirmala Sitharaman turned down Odisha’s demand for exemption of tax on kendu leaf.

Odisha’s Demand

  • Odisha has been demanding Kendu Leaves to be listed under the exempted items.
  • It has contended that 18 percent GST is adversely affecting the livelihood of lakhs of tribals, who are traditionally engaged in plucking Kendu leaves.
  • Chief Minister Naveen Patnaik had also written to Sitharaman demanding the complete withdrawal of GST on the collection of kendu leaves, known as the green gold of Odisha.
  • Raising the demand for an immediate rollback of 18 percent (pc) GST on kendu leaf at the meeting, Odisha reasoned that 28 % tax is already imposed on bidi, the finished product of kendu leaf.

Implications of GST on Kendu Leaves according to Odisha

  • The double taxation is affecting the pluckers, over 90 pc of whom are tribals, besides the binders and seasonal workers.
  • The 18 pc GST is against the Forest Rights Act, 2006, and PESA Act, 1996.
  • Kendu leaf, a minor forest produce, is the financial backbone of about eight lakh leaf pluckers, binders and seasonal workers of the state. They mostly belong to the tribal community and poorest of the poor in society.

Stance of GST Council

  • Although Andhra Pradesh supported the demand, the GST council, decided to maintain the status quo at 18 percent.

Kendu Leaves

  • Kendu leaf (Tendu Leaf, Diospyros Melanoxylon ) is a nationalized product like Bamboo and Sal seed.
  • Kenduleaf is one of the most important non-wood forest products of Odisha.
  • Due to its unique characteristics, viz. Matching aroma with Tobacco, Hygroscopic nature of dry leaves to withstand crack, Thinness and pliability, gradual combustion, resistance to fungus attack etc. these valuable leaves are used for wrapping Bidis.
  • Odisha is the third largest producer of kendu leaf next to M.P. and Chhattisgarh.