Unregistered Food Items to Attract 5% of GST

Seep Gupta
Seep Gupta at June 25, 2022

Recently the GoM (Group of Ministers) who are reviewing the GST rates has decided to remove the exemption from unregistered food items. Now 5 percent of GST will be levied on them if they will be sold under unregistered brands. This step is taken because many food processing industries including rice and wheat millers were misusing and taking advantage of the exemption for unbranded food items.
This decision was taken by the head of the GoM (Group of Ministers). The GoM is headed by Karnataka’s Chief Minister Basavaraj Bommai. According to the committee, no exemption from GST will be allowed when brands are used by the food processing industries but are not being claimed. This recommendation of the Group of Ministers will be considered in the upcoming meeting of the GST council which will be held in Srinagar from 28-29th of June.

The GoM has asked to buy more time to finalize their decision and proposal regarding GST rates rationalization. Its tenure may be extended till November-December.

This recent decision of GoM is based on the Tripura High Court’s judgment in April 2021 against Sarvasiddhi Agrotech. In this case, the court upheld the tax demand on the company for selling packaged rice under some other brand. In this case, the department then sought to tax the items at 5%.

According to the company, these are not the brand names but the quality markers. But according to the revenue department, these markings are nothing but brand names.

The GST council will likely consider the ministers’ recommendations on data analytics to tighten the GST compliances and scrutiny of GST returns to increase the revenue by sealing leakages and also to control the inflation. The GST council can also raise GST tax from 18 percent to 28 percent on online gaming, gambling, and cryptocurrencies.

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