After the GST Council’s meeting on last weekend, the Food traders are in confusion about levy of GST on branded foods. Even though the council has not changed the rates on food — 0% on unbranded stuff and 5% on branded stuff — many small traders who didn’t levy GST earlier said they could come under the 5% slab after the clarification.
“Trade is confused and hence on behalf of our chamber, we have asked our members to go ahead and charge 5% GST,” said Sushil Sureka, general secretary of the Ahilya Chamber of Commerce and Industry in Indore.
As pointed by Finance Minister Arun Jaitley, there was a trade inequality created among the industry as it was seen that the businesses were de-registering their brands and selling it under corporate brand names without paying the taxes on the same as the unbranded foods were exempted from the new all-encompassing indirect tax. However, in the GST meeting held recently, it is now decided to levy the 5% GST if an item had a registered trademark as of May 15, 2017. GST will also be charged if a product had a trademark or name on which it is entitled to maintain an actionable claim. Although the stuffs sold in the open will not face any taxes.
It is also debatable that actionable claims are yet to be explained for this purpose. It is assumed that all registered or non-registered items shall be taxed as because none of the items are sold without the firm’s name. Under (food industry regulator) FSSAI, goods are sold only with some mark or name.
The Confederation of All India Traders has called a meeting in Surat to demand reduction in taxes imposed on items which are used by common man.
Angshu Mallick, chief operating officer at Adani Wilmar, said there is no confusion. “Any mark, symbol or brand name registered will pay GST,” he said. “Earlier people were missing this guideline. Yes, they were using reputed names and not paying 5% GST. Now that confusion is over. You need to pay GST for using any brand name. Consumers at the end of the day look at final price inclusive of tax. For consumers, brands give them confidence to buy and brands provide consistency of quality.”
Siraj Chaudhry, chairman of Cargill India, said he would wait for the council to notify its decision before making any comments on the decision. “What we are hearing is only based on discussions of the council. So we will need to wait and see what is finally put in the gazette. It will be good to end the continuing confusion that seems to emanate from the intent of the law and interpretations that are being made by different people.”
Amit Mehta, managing director of McCormick that owns the ‘Kohinoor’ basmati brand, said the one nation, one tax structure has given a level playing field all the participants in the market and will surely give a boost to the branded packaged food industry. “While there may be some initial doubts in the market, this decision will be beneficial for growth of the industry in the long run.”
Sources –The Economic Times
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