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GST key tax reform to spur ease of doing business, say food processors
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Friday, 26 May, 2017, 08 : 00 AM [IST]
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Nandita Vijay, Bengaluru
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A number of players in the food processing industry, including MTR Foods Pvt Ltd, Mother’s Recipe and Maiyas, view goods and services tax (GST) as a key tax reform to stimulate ease of doing business. The GST levy spans from five per cent to 12 per cent, 18 per cent and 28 per cent for processed foods.
Ganesh Shenoy, chief financial officer, MTR Foods Pvt Ltd, “GST is a far-reaching fiscal reform measure which will push both the organised and unorganised trade to become tax-compliant. This will, in turn, boost the overall tax revenues for the country.”
“While we have been studying and getting ready for GST implementation for the last few months, we need to go through the detailed rules and chapter notes, especially for two of our product categories,” he added.
“Our initial reaction is that the impact will be of a marginal increase of product prices by 2-3 per cent. Overall for the fast-moving consumer goods (FMCG) category, the impact of GST appears to be mostly neutral,” Shenoy said.
Concurring with MTR, Sanjana Desai, head, business development, Desai Brothers Ltd - Food Division, Mother’s Recipe, said, “GST is pegged as one of the biggest and most anticipated tax reforms in our country.”
“The government is continuously ensuring a favourable business climate in India and one of their initiatives is GST, which promises to integrate India’s multi-layered indirect tax system into a unified one, improving the ease of doing business on a large scale in India,” she added.
FMCG, which is one of the fastest growing sectors in the Indian economy, is also expected to benefit from GST.
At the back end, the proposed unified tax system will reduce transportation cycle times, enhance supply chain decisions and consolidation of warehouses.
“These factors, coupled with the categorisation of several consumer products under the 18 per cent tax bracket, is definitely positive news, and is expected to reduce the cost and taxes, leading to cheaper consumer goods,” stated Desai.
Some processed items of mass consumption, like pickles, sauces, instant mixes and others, have been placed under the 18 per cent tax slab. They could have been considered in the lower tax bracket to maintain product pricing for the end consumer and in order to encourage the food processing sector, particularly in the Indian spice category.
“Though the GST rates are out, the rates of a few products are in two or three schedules. We are working on this with our consultants. On confirmation, we will share the information with all the stakeholders,” noted Krishna Murthy G, manager, imports, exports and indirect tax, Maiyas Beverages and Foods.
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