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No GST on food items when sold loose, clarifies Sitharaman
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IANS | 19 Jul, 2022
Following uproar in the Parliament over GST on food items, Union Finance
Minister Nirmala Sitharaman on Tuesday defended the imposition of 5 per
cent GST on food articles such as cereals, rice, flour and curd, which
are pre-packaged and labelled, saying that it was a unanimous decision
of the GST Council last month in which even non-BJP ruled states were
present.
The Finance Minister released a list of items that will not attract any GST, when sold loose, and not pre-packed or pre-labeled.
In
a series of tweets, she said: "Recently, the GST Council in its 47th
meeting recommended to reconsider the approach for imposition of GST on
specified food items like pulses, cereals, flour, etc. There have been a
lot of misconceptions about this that have been spread. Here is a
thread to lay the facts."
"Is this the first time such food
articles are being taxed? No. States were collecting significant revenue
from foodgrain in the pre-GST regime. Punjab alone collected more Rs
2,000 cr on food grain by way of purchase tax. UP collected Rs 700 cr,"
she said.
"Taking this into account, when GST was rolled out, a
GST rate of 5% was made applicable on BRANDED cereals, pulses, flour.
Later this was amended to tax only such items which were sold under
REGISTERED brand or brand on which enforceable right was not foregone by
supplier," the FM said.
"However, soon rampant misuse of this
provision was observed by reputed manufacturers & brand owners and
gradually GST revenue from these items fell significantly. This was
RESENTED by suppliers and industry associations who were paying taxes on
branded goods. They wrote to the Govt to impose GST uniformly on all
packaged commodities to stop such misuse. This rampant evasion in tax
was also observed by States."
"The Fitment Committee - consisting
of officers from Rajasthan, West Bengal, Tamil Nadu, Bihar, Uttar
Pradesh, Karnataka, Maharashtra, Haryana, and Gujarat - had also
examined this issue over SEVERAL meetings and made its recommendations
for changing the modalities to curb misuse.
"It is in this
context that the GST Council in its 47th meeting took the decision. With
effect from July 18, 2022, only the modalities of imposition of GST on
these goods was changed with no change in coverage of GST except 2-3
items," said the minister.
"It has been prescribed that GST on
these goods shall apply when supplied in 'pre-packaged and labelled'
commodities attracting the provisions of Legal Metrology Act."
"For
example, items like pulses, cereals like rice, wheat, and flour, etc,
earlier attracted GST @ 5% when branded and packed in unit container.
From 18.7.2022, these items would attract GST when 'pre-packaged and
labeled'," Sitharaman tweeted.
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