In response to the Karnataka CM’s comment seeking the intervention of the GST Council to issue a clarification to dealers not to pass on the new GST levy on goods to consumers in relation to the new levy of GST on “pre-packaged and labelled goods”, the Union Finance Minister clarified that the prescibed14 food items will not attract GST if sold loose.
Finance Minister Nirmala Sitharaman on Tuesday took to Twitter to clarify the decisions taken by the GST Council in its 47th meeting. The council recommended reconsidering the approach for the imposition of GST on specified food items like pulses, cereals, flour etc. The FM highlighted that certain items including pulses/daal, wheat, rye, oats, maize, rice, atta/flour, suji/rawa, besan, puffed rice, curd/lassi when sold loose and non-pre-packed or prelabeled, will not attract any GST. Sitharaman tweeted that this is not the first time these food articles are being taxed and that 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.
“This decision was a much-needed one to curb tax leakage. It was considered at various levels including by officers, the Group of Ministers, and was finally recommended by the GST Council with the complete consensus of all members,” she said.
In a Twitter thread, Sitharaman said that when the GST was rolled out, a rate of 5% was made applicable on ‘branded’ cereals, pulses, flour which was later amended to tax only such items which were sold under ‘registered’ brand or brand on which enforceable right was not foregone by the supplier.
“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,” she added.
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