A list of food items that are exempt from GST was published by Finance Minister Nirmala Sitharaman on Tuesday, but only if they are sold loose and not packaged or labeled beforehand. Pulses/daal, wheat, rye, oats, maize, rice, aata/flour, suji/rawa, besan, puffed rice, and curd/lassi are a few examples of these.
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”. (9/14)
— Nirmala Sitharaman (@nsitharaman) July 19, 2022
The new GST rates that went into effect on Monday were clarified by the minister in a series of tweets. The action follows the adjournment of Lok Sabha sessions on Tuesday due to opposition demonstrations against GST rates and price increases. In her tweets, Sitharaman defended the 5% GST imposed on food items, claiming that the GST Council unanimously decided to do so and that all states were present when the topic was brought up by the Group of Ministers on Rate Rationalization on June 28, 2022.
She said that this isn’t the first time that such food articles are being taxed. “States were collecting significant revenue from foodgrain in the pre-GST regime. Punjab alone collected more than Rs 2,000 cr on food grain by way of purchase tax. UP collected Rs 700 cr.”
Explaining the GST, she said that when GST was rolled out, a GST rate of 5 percent was made applicable on trademark cereals, pulses, flour. Later this was changed to tax only such items which were sold under a registered brand or brand on which enforceable right was not foregone by the supplier.
However, she claimed that reputable manufacturers and brand owners immediately began to widely abuse this clause, which led to a considerable decline in the GST money generated by these goods. “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,” Sitharaman said in a tweet.
“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 were changed with no change in coverage of GST except 2-3 items. It has been prescribed that GST on these goods shall apply when supplied in “pre-packaged and labeled” commodities attracting the provisions of Legal Metrology Act,” the minister said.
