Revised GST on unlabelled packaged food items explained
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Revised GST on unlabelled packaged food items explained

"This is the first time that GST is being imposed on unbranded food products"

Revised GST on unlabelled packaged food items explained

Noida: On Monday, July 18, the revised GST rates for pre-packed food items, and hotels, came into effect. As of now, 5 per cent GST was only payable on the branded food grains like Atta, Maida, semolina, pulses, rice, wheat, paneer, and honey. However, according to the latest modification, the government will now impose GST on unlabelled packaged food items less than 25 kg or 25 litres.

As a result, traders, customers, and every middle-class person may have to suffer more due to increased prices on daily essentials. It is worth noting that GST will not be imposed on unbranded and unlabelled food above 25kg.

In this regard, Cityspidey talked with Sushil Kumar Jain, president of Noida sector 18 market association, and convener of CAIT (The Confederation of All India Traders), Delhi NCR to understand the effects of the revised GST.

Sushil Kumar Jain
Credit: Supplied

As per notification published under the GST Act that all varieties of packaged and labelled food items along with non-labelled will be taxed at the rate of 5%. Sushil points out that the new notification is such that wealthy manufacturers have an advantage as GST won't be levied above 25 kg. But when the GST is levied on goods below 25kgs, prices of non-branded and branded goods become equal. As a result, consumers would prefer branded goods. Thus, hitting the small-scale manufacturers and traders.

He says, "This is the first time since independence that GST is being imposed on unbranded food products. The government should review its decision and reverse it since doing so will put an unacceptable weight on the wallets of the poor and cause inflation."

Sushil mentions that GST will now be imposed on items selling in open forms like Paneer, honey, curd, lassi, buttermilk, dried pulses, dry ginger, saffron, dry turmeric, celery, curry leaves and other spices, wheat, maize, Millet, Pearl Millet, ragi, and all kinds of grains like rai, barley, rice, oats (oats), buckwheat, millet, canary seed, paddy, Atta, maize flour, rye flour, semolina, porridge, potato flour, all kinds of jaggery, puffed rice.

Sushil highlights that although GST has been in place for five years, about 1146 modifications have been made since then, which shows that GST must be made simpler. Because of the intricacies of this rule, traders feel harassed. Moreover, people are not able to understand the revised GST properly. The government should do justice to the traders by adopting a straightforward GST law, and by taking suggestions by forming a committee of business organizations at the district level.

Till now, there were two categories of food grains, branded and non-branded. When anything is branded, it signifies that the name on the label is registered in the trademark. For food grains that are in packaging and have identification labels of any kind, then 5 per cent GST will be payable directly thereon.

Jain added that the terms pre-packaged and labelled would now be regarded under Section 2 of the Legal Metrology Act. Pre-packaged in this context refers to a sealed or not sealed. Both will be considered pre-packaged if it is packed in the prescribed quantity.

"A package that is marked, stamped, printed, or graphically marked is referred to as being labelled. The unique aspect is that the GST Council's notification now includes the word 'retail' with 'packaging'. Labelling (self-declaration) is required for both retail and wholesale packages as per regulations 6 and 24." says he.

Sushil adds, "Therefore, after reconsidering all these points, the government should reverse its previous actions, conduct a thorough review of the GST, and introduce a straightforward GST."

Sushil informs that the CAIT will start a nationwide movement on July 26, 2022, to draw attention to the differences in the GST rules, legislation, and tax rates starting in Bhopal.