New Delhi, June 27: The agrarian crisis in the country had been prevalent for the last couple of years and among the most affected are the tobacco cultivators, who complain that their business shrunk by more than Rs 4,000 crore in last six years. As Finance Minister Nirmala Sitharaman will be presenting Union Budget 2019 in Parliament on June 5, these farmers expect ease in taxation norms and relief in excise duty.

Stating the reason for such a humungous loss in the sector, Federation of All India Farmer Associations (FAIFA) claim that the drop in production of tobacco for manufacturing of domestic legal cigarettes has created further issues for them. The farmers' body is even of the opinion that the legal cigarette industry is reeling under severe 'penalizing taxations' due to continuous increases in taxation, resulting in the dip of legal cigarette sales volume by more than 25% since 2012. Union Budget 2019 Predictions: Finance Minister Nirmala Sitharaman to Open Pandora Box on July 5; Here's What to Expect

Apart from that, FAIFA president Javare Gowda opines that increased cess rates by GST council to correct an error is cigarette taxation under the new tax regime has further deteriorated their plight.

Expressing the reason for the high rise of tobacco and the poor plight of tobacco farmers, Gowda said, as reported by Economic Times, "This has inadvertently led to an increase in compensation cess rates which, surely was not the intention of the government. The revised compensation cess rates have resulted in additional taxes of around 13% above the pre-GST levels. We would like to underline that the principle of revenue neutrality has been reiterated time and time again by the government in respect of the fixation of tax rates in GST era."

It is to be known that tobacco farmers have tried growing various alternative crops, but have failed. Time and over again, tobacco farmers have made several representations to the Union Finance Ministry and other government bodies to correct the error in cigarette taxation under the new GST regime. Under the GST regime, the cascading effect on excise duty exist which was not there in the pre-GST system. Nirmala Sitharaman And Team All Set to Revamp GST on June 21; Mull Curb on Tax Evasion

Considering the fact that cigarettes account for 86% of revenue taxation, while rest taxable revenue comes from beedi and smokeless tobacco and other products, production of tobacco for farmers have become a huge challenge for the farmers. Adding on, an addition of a 32% increase in illegal cigarette trade making has made India the fourth largest illegal cigarette market globally.

(The above story first appeared on LatestLY on Jun 28, 2019 12:04 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).