New Delhi, 18 July: The government clarified on Monday that commodities and food items such as pulses, cereals, rice, wheat, and flour in a single package containing more than 25kg or 25litres will not fall under the category of “pre -packaged and labelled commodity” for the purposes of the Goods and Services Tax (GST) and will not be taxed.
For example, the supply of packed flour of 25kg intended for retail sale to consumers will be subject to a 5% GST, but the supply of such product in a 30 kg pack will not be subject to GST, according to a statement issued by the union Finance Ministry on Monday morning.
Before being sold to customers, pre-packaged food items are wrapped or placed in a container.
The GST Council raised taxes on a variety of items, including various types of inks, pencil sharpeners, knives, spoons, LED lamps, solar water heaters, and power-driven pumps, at its 47th meeting on June 29, including a 5% GST on pre-packaged and labelled food items, which became effective on Monday.
Following the council’s decision, traders claimed that the move would harm small businesses.
According to the Confederation of All India Traders, “there is a lot of anger and outrage among the country’s food grains traders over the GST Council’s recommendation to bring all types of pre-packed and pre-labelled foodgrains and other items under the GST tax slab of 5%, which will cause huge loss of business to foodgrain traders across the country” (CAIT).
“With this decision, big brands will be able to capture the market at the expense of small manufacturers and traders.” Special food items, cereals, and other non-branded items were previously exempt from GST. The council’s decision means that “pre-packaged and pre-labelled retail packs, including pre-packaged, pre-labelled curd, lassi, and buttermilk, will now attract GST tax, causing significant harm to the business of food grains traders in more than 6,500-grain markets across the country.”
“As a result of this decision, agricultural products with pre-packaged labels such as paneer, buttermilk, packaged curd, wheat flour, other cereals, honey, papad, food grains, meat and fish (except frozen), puffed rice, and jaggery , among others, will become more expensive,” the statement said.
