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FOOD PROCESSING

GST Council reduces tax levied on packaged food items from 18% to 12%
Tuesday, 13 June, 2017, 08 : 00 AM [IST]
Ashwani Maindola, New Delhi
Following a revision of the tax slabs by the Goods and Service Tax (GST) Council, the 18 per cent tax levied on several packaged food items was reduced to 12 per cent. Finance minister Arun Jaitley said, “Fruit and vegetable products, such as pickles, spreads, ketchup and mustard sauce, and instant food mixes, have been put into the 12 per cent tax bracket, because they are consumed by the common man.”

A rectification was the inclusion of instant food mixes in the official notification. It was omitted from the official notification issued by the finance ministry, despite the fact that it was on the list at the press conference that followed the recent meeting of the Council.  

He added, “The reduction was based on two principles. Firstly, it was imperative to maintain the equivalence levels, and secondly, in certain cases, we breached the equivalence principle due to the change in the nature of the economy and the preferences of consumers.”

According to the notified list issued by the GST Council, the tax levied on cashewnuts was reduced to 12 per cent, that on raisins was reduced to five per cent from twelve per cent, that on cereals and grains (hulled) was reduced to zero per cent from five per cent and that on Palmyra jaggery was reduced to zero per cent from 18 per cent.

The revised GST rates also included all goods under Chapter 20 of HSN, which include preparations of vegetables, fruits, nuts or other parts of plants, including pickles, murabba, chutneys, jams and jellies. While it was proposed that these would be placed in the 18 per cent or 12 per cent slab, they will now be placed in the 12 per cent slab.

Ketchup and sauces (other than curry paste, mayonnaise and salad dressings, mixed condiments and mixed seasonings) and mustard sauce will now be place in the 12 per cent slab, while the tax levied on curry paste; mayonnaise and salad dressings, mixed condiments and mixed seasonings was reduced from 28 per cent to 18 per cent.

The tax levied on bari made of pulses, including mungodi, was also reduced from 18 per cent to 12 per cent.

However, industry experts opined that there were anomalies in the released notification of revised rates. It excluded instant mixes, which are largely used by working women and students. Moreover, issues related to certain malt-based health drinks and custard are yet to be sorted out.

Meanwhile, the pickle industry breathed a sigh of relief. Under the previous proposal, pickles were put in the 18 per cent slab.

Rajheev Agarwal, chief executive officer, Nilon’s Enterprises Pvt Ltd, Pune, said, “We welcome the decision. However, it is still 4-5 per cent higher than the present rates, which comprise a total of two per cent excise duty and 5-7 per cent value-added tax (VAT).”
 
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