Ease of Doing Business for MSMEs: The government’s clarification on exempting specified unbranded pre-packed or labelled food items weighing above 25 kilograms from 5 per cent Goods and Services Tax (GST) is a big relief for wholesale traders, said traders’ body Confederation of All India Traders (CAIT) on Monday. According to FAQs issued by the Central Board of Indirect Taxes and Customs (CBIC) on Sunday to clear doubts on GST applicability on pre-packed and labelled goods, only pre-packed and labelled food items such as pulses, rice, wheat, flour etc., (as specified under the Chapters 1 to 21 of the tariff) up to 25 kg will attract 5 per cent GST.
However, if for any reason, retailers supply these items in loose quantity from such packs, such supply by retailers is not a supply of packed commodity for the purpose of GST levy, the FAQ said. Hence, items from the 25-kg pack sold loose to customers will not attract 5 per cent GST.
“Those who come under the purview of this tax will get input credit of the given tax, while there will be no tax on giving loose goods. Therefore, the implication of the tax remains on a section of the traders,” CAIT said in a statement.
Last week, the government had said unbranded pre-packed and labelled food items would have to pay 5 per cent GST from July 18 onwards. So far, GST applied to food items bearing a registered brand name. Moreover, certain other pre-packed and labelled items as well such as curd, lassi, puffed rice etc., would now attract 5 per cent GST. “From today all types of dry and liquid food grains including packed curd, lassi, butter milk will be costly,” CAIT said.
The changes made by the government are in “modalities of imposition of GST on branded specified goods to “pre-packaged and labelled” specified goods,” CBIC noted. The expression ‘pre- packaged and labelled’ means the pack in which the food item is packed or carries a label is required to bear the declarations under the provisions of the Legal Metrology Act.
Traders’ body said it will launch a nationwide movement from July 26 for the government to review the GST framework and launch a streamlined GST law. “The government and the traders have had many experiences in the last five years with respect to GST. On the basis of those experiences, it is necessary to streamline the GST tax system so that latter can work permanently and traders can easily comply with taxes which will yield more revenue for the government,” said CAIT National President BC Bhartia and Secretary General Praveen Khandelwal.