Agri Business

TN opposes move to hike GST on coconut oil in less-than-1-litre pack to 18%

Our Bureau Chennai | Updated on September 17, 2021

‘It will hit buyers, southern States’

Tamil Nadu strongly opposed the move to increase GST rate on packed edible coconut oil of less than one litre to 18 per cent from 5 per cent, terming the proposal anti-poor, anti-Southern States, which produce bulk of the coconuts, and anti-Indian as it will support other imported oils.

“The fundamental principle of fairness demands that we cannot single out a south-Indian centric domestic oil for a 360 per cent GST rate increase, while leaving other Indian and imported oils at 5 per cent,” the State Finance Minister Palanivel Thiaga Rajan said at the 45th GST Council Meeting on Friday. The Fitment Committee recommended that keeping in mind the general consumer usage pattern of such products, that coconut oil, when packed and sold in a unit container of less than 1 litre may be classified as hair oil (under Chapter 33), attracting a GST rate of 18 per cent irrespective of its actual end use. The edible coconut oil, when packed and sold in a unit container of one litre or above, is subject to GST at the rate of 5 per cent.

‘Biased approach’

“We find this recommendation to be perverse and lacking in either logic or fairness. In fact, we will go so far as to consider this decision to have been made with bad faith intent, against the interest of Tamil Nadu which is one of the largest producers of coconuts and coconut oil, and indeed many of the southern states such as Kerala, Andhra Pradesh and Karnataka,” Rajan said.

“How can you classify something which is clearly edible as effectively non-edible (based on the size of the container) for the sake of levying GST? How do you decide on one litre as the cut-off for even considering whether something is intended for edible use or not?”, he questioned.

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Rajan questioned as to why should only coconut oil be singled out for this treatment compared to other edible oils with multiple uses, such as mustard oil or gingelly oil? When the Central government has chosen to exempt imported oils such as palm oil or olive oil from import duties, south-Indian oil is being discriminated against, he stated.

Tamil Nadu also opposed the proposal to levy a higher rate of 18 per cent on job work by contract manufacturers to the brand owners for the manufacture of alcoholic liquor for human consumption.

’IGST hit’

Also, there is a proposal recommended by the law committee to permit the IGST refund route to only certain classes of exporters. “Presently, close to 70,000 exporters avail the IGST route for refunds. If the proposal is accepted, this will be reduced to about 10,000. This will surely adversely affect export activity,” he said.

Published on September 17, 2021

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