Home / Companies / News /  Traders to write to state finance ministers to rollback 5% GST on pre-packed and unbranded food

Traders to write to state finance ministers to rollback 5% GST on pre-packed and unbranded food

The GST Council during the two-day meeting in Chandigarh also decided that the room rent (excluding ICU) exceeding  ₹5000 per day per patient charged by a hospital shall be taxed to the extent of the amount charged for the room at 5% without input tax credit. (iStock)Premium
The GST Council during the two-day meeting in Chandigarh also decided that the room rent (excluding ICU) exceeding 5000 per day per patient charged by a hospital shall be taxed to the extent of the amount charged for the room at 5% without input tax credit. (iStock)

  • CAIT would send a memorandum to all state finance ministers seeking a rollback of the decision as it will hit small businesses, increase compliance burden for small traders

BENGALURU : Traders across the country have demanded the withdrawal of the goods and services tax (GST) council’s decision to do away with exemption on pre-packed and unbranded food items and impose a 5% tax. 

The Confederation of All India Traders (CAIT) would send a memorandum to all state finance ministers seeking a rollback of the decision as it will hit small businesses, increase compliance burden for small traders. 

The Council last week decided to bring packed foods like milk, curd, and items like dried leguminous vegetables and makhana, wheat or meslin flour, jaggery, puffed rice, organic food, manure and compost under 5% slab. The decision was part of the larger rate rationalization exercise to boost GST revenue collections with compensation scheme for states coming to an end.  

The Council did away with a raft of exemptions and increased GST rates on others, besides correcting inverted duties. 

“The foodgrain and other vertical of traders have started mobilising traders by organising State level meet of foodgrain, pulses and rice traders and are deciding to present a memorandum to their respective Finance Ministers urging them to withdraw the decision," CAIT said in a press release on Thursday.

 It pointed out that the decision of the Council, which is chaired by the Union Finance minister and has state finance ministers as members, will lead to rise in inflation for consumers.

 “The main contention of the disagreement is that only 15% of the population in the country uses branded goods while 85% of the population lives on products which are pre-packed or pre-labelled.

Bringing these items in the tax slab of GST is an unjust move, which should be taken back by the GST council and the decision should not be notified as an immediate relief," said Praveen Khandelwal, Secretary General, CAIT.  He added that instead of bringing the goods daily use under the tax net, it would be more appropriate to widen the tax net by bringing more and more people under the GST tax net.

The GST Council during the two-day meeting in Chandigarh also decided that the room rent (excluding ICU) exceeding 5000 per day per patient charged by a hospital shall be taxed to the extent of the amount charged for the room at 5% without input tax credit.

ABOUT THE AUTHOR

Dilasha Seth

" Dilasha Seth is a journalist reporting on macroeconomic policy for the last 11 years. She writes extensively on issues including international trade, macroeconomic data, fiscal policy, and taxation. At Mint, she reports on trade deals that India is signing besides key policy decisions of the Ministry of Finance. She closely tracked and covered the transition to the goods and services tax (GST) regime in 2017 and also writes on direct tax-related issues. In the past, she has worked with Business Standard and The Economic Times. She is based in Bangalore."
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