New Delhi: Union Finance Minister Nirmala Sitharaman on Tuesday clarified that the decision to impose Goods and Services Tax (GST) on pre-packed food grains, including cereals and pulses, has been taken in consensus with states. In a series of tweets, she clarified that this is not the first time a tax has been imposed on food grains as states used to collect Value Added Tax (VAT) during the pre-GST regime.
“Is this the first time such food articles are being taxed? No. States were collecting significant revenue from foodgrain in the pre-GST regime. Punjab alone collected more ₹ 2,000 cr on food grain by way of purchase tax. UP collected ₹ 700 cr,” Sitharaman tweeted.
The Finance Minister’s clarification comes amid rising concerns among traders and consumers after the GST Council’s decision to impose 5 per cent tax on ‘pre-packed and pre-labelled’ food items. The wholesale gain markets in Delhi was closed on July 16 to protest against GST on food grains. The GST on pre-packed food items came into effect from July 18.
Ms Sitharaman stated that the decision was unanimously taken by the GST Council in its 47th meeting in Chandigarh on June 28. The decision was much-needed to curb tax leakage, she said.
“The GoM that recommended these changes was composed of members from West Bengal, Rajasthan, Kerala, Uttar Pradesh, Goa & Bihar and was headed by CM of Karnataka. It carefully considered this proposal, taking into account the tax leakage. This was a unanimous decision by the GST Council,” read the tweet.
According to the Finance Minister, all the states — present at the June 28 meeting — agreed to the recommendations of the GST Council and the decision was taken by consensus. Even the non-BJP states like Punjab, Chhattisgarh, Rajasthan, Tamil Nadu, West Bengal, Andhra Pradesh, Telangana and Kerala supported the move.
The GST Council’s decision to impose tax on ‘pre-packed and pre-labelled’ food items is only a change in the modalities of GST imposition on these goods while there is no change in the coverage of the tax net, except for 2-3 items, Ms Sitharaman mentioned.
Nirmala Sitharaman clarified that the decision was unanimously taken by the GST Council.
Union Finance Minister Nirmala Sitharaman on Tuesday clarified that the decision to impose Goods and Services Tax (GST) on pre-packed food grains, including cereals and pulses, has been taken in consensus with states. In a series of tweets, she clarified that this is not the first time a tax has been imposed on food grains as states used to collect Value Added Tax (VAT) during the pre-GST regime.
“Is this the first time such food articles are being taxed? No. States were collecting significant revenue from foodgrain in the pre-GST regime. Punjab alone collected more ₹ 2,000 cr on food grain by way of purchase tax. UP collected ₹ 700 cr,” Sitharaman
The Finance Minister’s clarification comes amid rising concerns among traders and consumers after the GST Council’s decision to impose 5 per cent tax on ‘pre-packed and pre-labelled’ food items. The wholesale gain markets in Delhi was closed on July 16 to protest against GST on food grains. The GST on pre-packed food items came into effect from July 18.
Ms Sitharaman stated that the decision was unanimously taken by the GST Council in its 47th meeting in Chandigarh on June 28. The decision was much-needed to curb tax leakage, she said.
“The GoM that recommended these changes was composed of members from West Bengal, Rajasthan, Kerala, Uttar Pradesh, Goa & Bihar and was headed by CM of Karnataka. It carefully considered this proposal, taking into account the tax leakage. This was a unanimous decision by the GST Council,” read the tweet.
According to the Finance Minister, all the states — present at the June 28 meeting — agreed to the recommendations of the GST Council and the decision was taken by consensus. Even the non-BJP states like Punjab, Chhattisgarh, Rajasthan, Tamil Nadu, West Bengal, Andhra Pradesh, Telangana and Kerala supported the move.
The GST Council’s decision to impose tax on ‘pre-packed and pre-labelled’ food items is only a change in the modalities of GST imposition on these goods while there is no change in the coverage of the tax net, except for 2-3 items, Ms Sitharaman mentioned.
“Items like pulses, cereals like rice, wheat, and flour, etc, earlier attracted GST @ 5% when branded and packed in a unit container. From 18.7.2022, these items would attract GST when “pre-packaged and labeled”. It must also be noted that items specified below in the list, when sold loose, and not pre-packed or pre-labeled, will not attract any GST,” she tweeted.
Pulses, wheat, rye, oats, maize, rice, flour, suji, besan, puffed rice and curd/lassi when sold loose and not pre-packed or pre-labelled won’t attract any GST.
Earlier, traders, suppliers and industry associations who were paying taxes on branded goods had requested the government to impose GST uniformly on all packaged commodities to stop misuse and tax evasion.
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