As tobacco traders planned to stay out of the auctions, farmers feared that the auction system would be severely affected and that they would face heavy losses. | Photo Credit: PHOTOS FOR REPRESENTATIVE PURPOSES ONLY
Taking a serious exception to the reported levy of Central Excise and Goods and Services Tax (GST) on non-manufactured tobacco, tobacco traders have decided to stay off tobacco auction platforms in Karnataka from January 24.
The Indian Tobacco Association (ITA), comprising tobacco traders, in a letter to the Executive Director of the Guntur Tobacco Board, has expressed its concern over the reported recent imposition of central excise duty of 18% and GST ranging from 28% to 40% on unmanufactured tobacco.
“As you are aware, the cumulative tax burden proposed on unmanufactured tobacco is extremely high and unprecedented. This sudden tax has caused serious uncertainty and financial stress on trade and industry, making it virtually impossible for buyers to accurately estimate costs and participate meaningfully in the auction process,” YA Chowdary, honorary secretary of the association, said in the letter.
“Without clear guidance on the applicability, pricing and compliance mechanism of the said taxes, ITA members cannot participate in tobacco auction purchases as they are required to move tobacco already purchased at the auction on or before January 31, before the proposed tax measures come into force,” the ITA said.
Members will not be able to participate in auction purchases from January 24 until the issue is clarified and resolved, Mr. Chowdary said.
Meanwhile, the association has already represented the matter to the Union Finance Minister and Union Commerce Minister and requested the government to withdraw the proposed taxes on unmanufactured tobacco considering the adverse impact on growers, traders, exporters and the entire tobacco value chain.
A statement by the Federation of Tobacco Growers of Virginia (FCV) in Karnataka said a delegation of tobacco growers from Karnataka, Andhra Pradesh and Telangana led by Rajahmundry MP D. Purandeswari met Union Finance Minister Nirmala Sitharaman along with recent Tobacco Board Chairman Chidi Yashhuwanth Kumar to express serious concern over recent Tobacco Board Chairman Chidi Yashhuwanth Kumar.
Karnataka tobacco farmers explained that the auction prices have already fallen by almost 10%. As tobacco traders planned to stay out of the auctions in view of the imposition of 18% tax on unmanufactured tobacco, farmers feared that the auction system would be severely affected and that they would face heavy losses.
Published – 22 Jan 2026 20:02 IST
