With all eyes set on the next GST Council meet, expected to take place later this month, the clamour for reducing GST on branded packaged snacks and commonly-used food items is rising. The packaged food industry is seeking reduction in GST on ready-to-eat, ready-to-cook and instant food mixes.
In a letter sent to the Finance and Food Processing Ministries, industry chamber Assocham urged the Central government to cut GST on commonly-used food products such as pickles, chutneys, sauces and fruit drinks to 5 per cent from the current slab of 12 per cent.
“These food products are used by all segments of the society and are not elitist products and can be seen being served at road side stalls, street vendors, community festivals, places of pilgrimage, institutional messes, etc to common citizens,” the industry chamber pointed out.
Merging the slabs
With reports that the GST Council is mulling a proposal of merging the existing GST slabs, Assocham has also recommended a cautious approach so that food products that are currently attracting lower GST do not come under a higher slab.
“Due diligence should be done during this (merging of GST slabs). Otherwise, it may further create anomalies..as some products which initially were in lower slab, may come under higher slab with the difference being passed on to the consumers.
The processed food industry is already requesting to keep all its products at either 0 per cent or maximum 5 per cent.
If it is further increased, it will create huge gaps and further discourage new players from venturing into processing,” the letter added.
The industry chamber also said that the anomaly between higher tax on branded or packaged snack foods and lower tax on non-branded or unpackaged snack foods needs to be removed. It added that GST on branded snack foods such as namkeens, bhujias, fruit & vegetable chips (made of potato, banana, etc), should be reduced to 5 per cent from the current 12 per cent.
Any shift in consumption from branded to unbranded food products reduces revenues for the government and proves to be counter-productive and so all snack food products whether branded or non-branded should be placed at 5 per cent slab, the letter pointed out.
The packaged food industry has also raised concerns about GST rates levied on processes such as cutting, brining, syruping, pulping and crushing of fruits and vegetable which attracts either 5 per cent or 12 per cent GST. Assocham. in its letter. said these processes should be placed at 0 per cent GST,in a bid to encourage reduction of wastage of perishable fruits and vegetables.