Economy

GST hurdle for PM’s fortified rice plan

Shishir Sinha New Delhi | Updated on August 16, 2021

Experts call for lowering rates to make fortified rice accessible to poor

The GST rate of 18 per cent on fortified rice kernels (FRK) may prove to be a roadblock for the Prime Minister’s plan to supply fortified rice to the poor by 2024. Experts feel that the rate should be lowered to 0 (for unbranded fortified rice pellets) and 5 per cent (for branded ones) to make fortified rice more accessible.

FRK is key

“Malnutrition and lack of essential nutrients in poor women and poor children pose major obstacles in their development. In view of this, it has been decided that the government will fortify the rice given to the poor under its various schemes,” Prime Minister Narendra Modi said in his Independence Day speech on Sunday.

The rice available at ration shops, the rice provided to children in the mid-day meal or the rice available through every government scheme will be fortified by the year 2024, the Prime Minister said.

Extrusion tech

According to the Food Safety and Standards Authority of India (FSSAI) rice is fortified using extrusion technology. Milled rice is pulverised and mixed with a premix containing vitamins and minerals. FRK is produced from this mixture. It is then added to traditional rice in the ratio ranging from 1:50 to 1: 200 resulting in fortified rice, which is nearly identical to traditional rice in aroma, taste, and texture.

On July 12, a circular issued by the Food Fortification Resources Centre, a body set up by the FSSAI and Tata Trusts, said that FRK is classified under Harmonised System of Nomenclature (HSN) code 19049090 and attracts 18 per cent GST.

The clarification was issued based on a ruling by the Rajasthan Appellate Authority for Advance Ruling . The circular advised unified billing by FRK manufacturers using 18 per cent GST.

A report prepared by Delhi-based firms Athena Law Associates and Archana Jain & Co said: “As per our detailed analysis, FRK is correctly classifiable under Chapter Heading 1103 and GST @ 0 per cent (unbranded fortified rice pellets) and 5 per cent (branded fortified rice pellets),” adding that representations have been made to rectify the classification.

In May, a proposal for lowering GST on FRK was placed before the Fitment Committee of the GST Council.

However, the committee felt an exemption would not be appropriate as it was a value-added product. It deferred the issue on the grounds that the matter will be examined when fortified rice becomes part of the PDS.

Published on August 15, 2021

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