Foodgrain may not be cheaper under GST

Will foodgrain and pulses really become cheap after the GST? The fine print is different from what is being made to believe.

The GST Council has proposed a zero rate structure or nil tax for most of the food grain. However, branded food will be taxed at 5%.

Neither the Council nor the ministry clarified what constitutes branded food. But all the food-related packaged commodities have to be registered under the Food Safety Standards Act (FSSAI). The moment a trader lists himself under this Act, his commodity becomes branded.

By that standard, all packaged food will have to be taxed at 5%. Only those that come loose and sell mostly in mom and pop stores and roadside vendors will qualify for nil tax.

“We have appealed to the finance minister to come out with a catagorical classification of branded and non-branded food items as the traders are really confused,” said apex traders’ body CAIT’s chief, Praveen Khandelwal, but he regretted that neither the finance minister nor the ministry have gotten back to him on this matter. Similarly, he has also communicated to the ministry on the issue of 28% tax slab, which was originally designed for luxury goods and sin items, but apparently, even certain spare parts for two-wheelers have been put in this category.

“How can a two-wheeler come in luxury or sin goods,” he asked. CAIT has said that though only five days are remaining for the GST rollout, most of the smaller details have not been answered yet.