New Delhi: Finance minister Nirmala Sitharaman on Tuesday defended the imposition of 5% Goods and Services Tax (GST) on food articles such as cereals, rice, flour and curd which are pre-packaged and labelled, saying it was a unanimous decision of the GST Council last month in which even non-BJP ruled states were also present.
New Delhi: Finance minister Nirmala Sitharaman on Tuesday defended the imposition of 5% Goods and Services Tax (GST) on food articles such as cereals, rice, flour and curd which are pre-packaged and labelled, saying it was a unanimous decision of the GST Council last month in which even non-BJP ruled states were also present.
The Centre is defending the decision even as opposition parties protested outside Parliament against the rate hike.
"This was a unanimous decision by the GST Council. All states were present in GST Council when this issue was presented by the Group of Ministers on Rate Rationalisation in the 47th meeting held in Chandigarh on Jun 28, 2022," the minister said in a series of social media posts.
All states, including non-BJP states--Punjab, Chhattisgarh, Rajasthan, Tamil Nadu, West Bengal, Andhra Pradesh, Telangana and Kerala--agreed with the decision, which was taken by consensus, the minister said in the tweet.
She also said that the Group of Ministers that recommended these changes comprised members from West Bengal, Rajasthan, Kerala, Uttar Pradesh, Goa and Bihar and was headed by the chief minister of Karnataka. It carefully considered this proposal, taking into account the tax leakage, Sitharaman said.
"Is this the first time such food articles are being taxed? No. States were collecting significant revenue from food grain in the pre-GST regime. Punjab alone collected more ₹2,000 crore on food grain by way of purchase tax. UP collected ₹700 crore," the minister explained.
It must also be noted that these items like flour, puffed rice, curd, pulses, wheat and rice when sold loose--and not pre-packed or pre-labelled--will not attract any GST.
When GST was rolled out, a GST rate of 5% was made applicable on branded cereals, pulses, flour and later this was amended to tax only such items which were sold under registered brand or brand on which enforceable right was not foregone by supplier, the minister explained. However, soon rampant misuse of this provision was observed and suppliers and industry associations wrote to the government to impose GST uniformly on all packaged commodities to stop such misuse. This rampant evasion in tax was also observed by states, Sitharaman said in the Twitter post.
"To conclude: this decision was a much-needed one to curb tax leakage. It was considered at various levels including by officers, the Group of Ministers, and was finally recommended by the GST Council with the complete consensus of all members," Sitharaman said.