Tea growers have sought a review of the budget proposal to tax cash withdrawal in excess of Rs 1 crore from a bank account as it would hurt their operations in remote areas.

The Indian Tea Association and the Tea Association of India have appealed to the government to exempt the tea sector from the ambit of the proposal which will be effective from September 1, 2019.

The associations in separate statements said banking facilities in tea growing areas were inadequate and, therefore, workers are largely paid in cash. Assam, Kerala and Bengal are some of the biggest tea producing states in India.

Tea bodies said the imposition of a 2 per cent TDS would compromise the liquidity position of the tea estates.

The budget explained what led to the decision. “In order to discourage cash transactions, it is proposed to insert a new section 194N in the Act to provide for levy of TDS at the rate of 2 per cent on cash payments in excess of Rs 1 crore made during the year.”

However, it exempted the government, banks, cooperative societies engaged in the business of banking, post offices, banking correspondents and white label ATM operators, who are involved in the handling of substantial amounts of cash as a part of their business operations, from this provision. The tea industry now wants it to be added to this list of exemptions.