BHUBANESWAR: In a relief to lakhs of people belonging to tribal communities, the tax collected at source (TCS) on kendu leaves has been proposed to be reduced from the present 5 to 2 per cent in the 2026 Union Budget.
Kendu leaf collection is a primary source of income for millions of tribal and rural families in several states like Odisha, Madhya Pradesh and Chhattisgarh. Kendu leaf earlier played an important role in shaping politics particularly in western districts of Odisha.
Sources said though its political importance has now reduced, it still has great impact on economy of tribal communities in this region. The proposal for two per cent TCS is likely to directly increase the net income of these collectors. Besides, reduction in tax burden will also allow traders and government procurement agencies to offer better prices to the primary gatherers. The lower tax rate will make the leaf more competitively priced, besides increasing the overall volume of sales, particularly through government procurement agencies, they said.
“The high GST rate previously caused leaves to pile up in godowns. Now, the lower rate will help move this stock faster. Besides, the decision will also help the beedi manufacturers. As kendu leaf is used to roll beedis, lower tax on the raw material will also economically help the rural beedi-making industry, which employs a large number of women,” sources added.
However, the BJD has been demanding complete waiver of GST on kendu leaf. A BJD leader told this paper that this decision will not be of much help to the collectors. He said that when the GST on kendu leaf was slashed from 18 per cent to 5 per cent, the BJD had demanded complete waiver. The party stands by it, he added.