'Exempt low-price biscuits from GST'

'Exempt low-price biscuits from GST'

More than 240 small scale units manufacturing the ubiquitous glucose biscuits may face closure if the government decides to tax the healthy nutrition source of the poor at a higher rate.

The Biscuit Manufacturers Welfare Association (BMWA) has petitioned Finance Minister Arun Jaitley to exempt low price high nutrition glucose, marie and milk biscuits from the ambit of Goods and Services Tax.

“We have no objection if premium biscuits – sold at Rs 100 kg and above – are put in the 18% tax bracket,” said Mayank Shah, vice president of the Biscuit Manufacturers Welfare Association.

As per the current tax regime, the government does not charge any excise duty on biscuits that are priced below Rs 100 per kg. But various state governments levy a value added tax of up to 12.5%.

Low priced biscuits account for 52 % of the total 36 lakh tonnes of biscuits production annually. In terms of value Rs 13,850 crore worth low price biscuits are sold every year as against the Rs 22,150 crore turnover of the premium variety.

“We operate at very low margins ranging between 2% and 3%. These are easily washed out by a surge in sugar, wheat and vegetable oil prices,” Haresh Doshi, President of the BMWA said.

The BMWA said as many as 240 big factories that manufacture only low priced biscuits will be forced to down shutters if the government decides to tax them at higher rates. Glucose biscuits were retailing at Rs 40 per kg in 1996 and after 20 years cost Rs 70 per kg.

“There has been an increase of 225% in input costs, but we have passed on only 75% to the consumer,” Doshi said.

Contending that their biscuits are hygenically produced, he said any hike in the prices on account of high taxes would lead to a shift in demand to poor substitutes that are manufactured without adherance to quality and nutrition norms.

Doshi argued that the biscuit industry contributes Rs 3000 crore to the exchequer annually and in no way want to shirk from the responsibility.

“But, premium biscuits such as oatmeal, cream, cheese and dry fruit cannot be taxed at par with low-priced biscuits,” Doshi said.