The Tea Board of India intends to increase the charges of tea routed through e-auctions in respect of sellers, brokers, and buyers. The proposal is to hike the rates to 33.33 paise per kg, totalling ₹1 per kg of tea.
The charges were very nominal at 2 paise per kg which the Board implemented from FY19 when the government curtailed its fund for developing an e-auction system, directing the Board to enable the system to be self-reliant.
The Board, in a circular dated July 24 to stakeholders, said it is facing challenges to carry out its regular activities, including regulatory work such as sampling and seizure, legal expenditures, and studies related to the tea trade due to the reduction of grant by the government. The review of charges is absolutely necessary after examining the current costs of services, manpower, etc, the circular said, adding that the new charges would be implemented at the earliest and sought cooperation from the stakeholders.
The circular pointed out that the charges collected by the Board through the system are effectively utilised for vendor payments hired for services such as IT operations, maintenance and modification of e-auction software, hosting auction platform into cloud environment, etc. Being an e-commerce operator, the Board also engaged CA firms for complying with statutory obligations such as TDS, TCS etc.
Skyrocketing service charges
However, the service charges are skyrocketing with manifold increases in upfront and maintenance costs of the IT infrastructures. Currently, the Board receives an average charge of ₹3.70 crore from the auction proceeds, which is not adequate to bear all the e-auction expenditures. Besides, the Board is going to implement a web-based application for e-auction soon which would be a more user-friendly platform in which the stakeholders can operate with ease.
However, sources in the brokerage community told businessline that they are getting only ₹1 per kg if the tea is sold at ₹100 in the auctions. With this new circular, one-third of the amount would go to Tea Board and the broking firms would not be able to run their business after paying taxes.