The federal government on Monday clarified that commodities and meals objects equivalent to pulses, cereals, rice, wheat, and flour in a single bundle containing an amount greater than 25kg or 25litres won’t fall within the class of “pre-packaged and labeled commodity” for the needs of Items and Providers Tax (GST) and won’t entice the tax.
For instance, the provision of packed flour of 25kg meant for retail sale to the patron shall be liable to a 5% GST, however, the provision of such product in a 30 kg pack shall not entice GST, the Union finance ministry mentioned in an announcement issued on Monday morning.
Pre-packaged meal objects are wrapped or put right into a container earlier than being offered to prospects.
At its forty-seventh assembly on June 29, the GST Council raised taxes on a bunch of things equivalent to numerous kinds of inks, pencil sharpeners, knives, spoons, LED lamps, photo voltaic water heater, and power-driven pumps, together with a 5% GST on pre-packaged and labeled meals objects, efficient from Monday.
After the council’s decision, traders said the move will damage small businesses. “There is a lot of anger and outrage among the food grains traders of the country on the recommendation of the GST Council for bringing all types of pre-packed and pre-labeled foodgrains and other items under the GST tax slab of 5% which will cause huge loss of business to foodgrain traders across the country,” according to the Confederation of All India Traders (CAIT).
“This decision will empower big brands to capture the market at the cost of small manufacturers and traders. Special food items, cereals, etc., which were not branded till now, were exempted from GST.
With this decision of the council, pre-packaged and pre-labeled retail packs including pre-packaged, pre-labeled curd, lassi, and buttermilk will now attract GST tax and will cause huge damage to the business of food grains traders in more than 6,500-grain markets across the country,” it said.
“It is clarified that a single package of these items (cereals, pulses, flour, etc.) containing a quantity of more than 25 Kg/25 liter would not fall in the category of a pre-packaged and labeled commodity for GST and would therefore not attract GST,” it said.
Giving illustration, the CBIC said the supply of 25-kg pre-packed atta meant for retail sale to the ultimate consumer shall be liable to GST. However, supply of such a 30-kg pack thereof shall be exempt from levy of GST.
The board also said that GST would apply on a package that contains multiple retail packages, for example, a package containing 10 retail packs of flour of 10 kg each, the CBIC, under the Ministry of Finance, said.
“If several packages intended for retail sale to the ultimate consumer, say 10 packages of 10 kg each, are sold in a larger pack, then GST would apply to such supply. Such packages may be sold by a manufacturer through a distributor. These individual packs of 10 kg each are meant for eventual sale to the retail consumers,” the CBIC said.
However, a package of, say, rice containing 50 kg (in one individual package) would not be considered a pre-packaged and labeled commodity for GST levy, it added.