Bommai muddies waters about GST for dairy products

There's a provision for companies to claim the 5% (GST) back, they should not burden consumers, Bommai said

With citizens angry over rising prices, Chief Minister Basavaraj Bommai claimed Monday that companies need not "burden" consumers with the 5 per cent GST levied on packaged and branded milk products, citing a reimbursement clause.

Bommai said this while BJP leaders tried to defend price rise in the face of a fresh attack mounted by the Congress on "Gabbar Singh Tax".

"If the reimbursement is done, then there is no need to increase prices," Bommai told reporters, adding that he would raise this in the next GST Council meeting.

According to Bommai, the GST rates only applied to those who sell branded packaged dairy products. "There's a provision for companies to claim the 5 per cent (GST) back. If they don't, whatever taxes they paid for packaging and other materials will be transferred to consumers. When there is a chance for companies to reimburse the taxes, they should make use of it and not burden consumers," he said, adding that there was no need for companies to increase prices.

Reacting to Bommai's comments, Madhusudhan BV Rao from the Centre for Budget and Policy Studies said that the provision to reimburse input tax credit was present in the construction sector. However, there aren't any guidelines or clarification on reimbursements for dairy products. "Apart from Bommai's statement, there is no clarification about it at all," he said.

Rao noted that if a trader is taxed, he will immediately extend it to the consumer. "The CM saying that the companies should not have imposed GST is no more than 'wishful thinking'. When it is clearly levied through orders, they should have issued an addendum detailing how it (reimbursement) will work," he added.

Meanwhile, BJP national general secretary CT Ravi maintained that taxation is not a "unilateral" decision as all states are represented in the GST Council. "There are hundreds of instances where rates were reduced when it burdened the people," he said while former minister K S Eshwarappa said price rise is "sometimes inevitable".

'Bloodsucking govt'

Leader of the Opposition Siddaramaiah said GST rate hike on curd, cottage cheese, buttermilk, rice, wheat, barley, oats, solar water heater, LEDs, bank cheque books and other items would hit the poor and middle class. "The government has cut corporate tax from 30 per cent to 22 per cent, but the poor aren't spared. This is a bloodsucking government," he said.