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GST on non-branded food items will lead to price rise and inflation: Experts
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Friday, 01 July, 2022, 08 : 00 AM [IST]
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Ashwani Maindola, New Delhi
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The GST Council held its meeting recently and decided to withdraw exemptions on specified non-branded food items. The decision, experts say, will lead to price rise and inflation in food products.
After Council’s meet, the official statement issued reads, “Hitherto, GST (Goods and Services Tax) was exempted on specified food items, grains etc. when not branded, or right on the brand has been foregone. It has been recommended to revise the scope of exemption to exclude from it prepackaged and pre-labelled retail pack in terms of Legal Metrology Act, including pre-packed, pre-labelled curd, lassi and butter milk”.
Such products shall now attract 5% GST, which was nil.
Trade experts say that according to the new rules, unbranded food items like rice, wheat, pulses, atta, and paneer, which earlier were outside of the purview of GST are now included and attract 5% GST.
“This would bring every food item under the FSS Act as well and will eventually lead to cost escalation,” said a trade analyst.
However the organised sector players welcomed the decision.
Ashish Khandelwal, managing director, BL Agro-Nourish food products, comments, "Bringing the unbranded foods under the GST slab is a very good step for the food product industry as it will regulate the industry and move towards the organised market. It will now help create a clear demarcation between the good quality and bad quality products and will make it easier for the consumer to choose the best."
The 47th GST Council met under the chairmanship of Union Minister for Finance & Corporate Affairs Nirmala Sitharaman in Chandigarh.
Amongst other decisions taken at the GST Council meet, the tax rates for machines for cleaning, sorting or grading of seed, grain pulses; machinery used in milling industry or for the working of cereals etc.; pawan chakki that is air based atta chakki; wet grinder, has been increased from 5% to 18%.
Also, GST rates for machines for cleaning, sorting or grading eggs, fruit or other agricultural produce and its parts, milking machines and dairy machinery has been increased from 12% to 18%.
Further, the council decided that refund of accumulated ITC (Input Tax Credit) not to be allowed on flowing goods including edible oils.
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