BENGALURU: Food brands which had disappeared from markets after the Goods and Services Tax rollout are likely to make a comeback, with the GST Council deciding to tax unregistered brands too.
According to the GST law that came into force on July 1, packaged food items with a registered trademark on the packet attracted a 5% levy. As the law didn’t specify anything about unregistered products, hundreds of brands applied for deregistration and many replaced registered logos with unregistered ones.
However, the GST Council that met on Saturday issued a clarification, saying even unregistered food brands are to be taxed at 5%.
“Since it’s clear that all packaged food products, irrespective of the logos, will attract tax, there’s no point in printing an unregistered trademark on the packet. Authentic logos of brands will add to the product’s credibility, forcing brands which had vanished to return,” said Rameshchandra Lahoti, president, Bengaluru Foodgrains and Pulses Merchants Association. Lahoti, a wholesale dealer himself, said 25 of the 35 registered brands sold at his outlet had changed their logos.
While a few brands, including Bul let rice, Kesarkali rice, Lal Qilla basmati rice, Double Horse urad dal and Shivling tur dal re Shivling tur dal retained their registered trademarks as they didn’t want to lose the reputation earned over the years, many had applied for deregistration. Trade bodies said manufacturers were thinking of withdrawing deregistration applications.
“Not just GST, even food regula tions bring manufacturers under the tax net if they sell packaged products. Hence, we will get to see more authentic brands in the market in the coming days,” said J R Bangera, former president, Federation of Karnataka Chambers of Commerce and Industries (FKCCI).
According to the Food Safety and Security Act, it is mandatory to print details, including name of the manufacturer (refining mill) and date of manufacturing on the pack. The GST Council has made it clear that food packets with anything printed on them will attract tax.
Food merchants, however, are not happy with the Centre’s move to tax packaged food, which was exempted under the Value Added Tax (VAT) regimen. “We are demanding that food items be exempted from tax. Another option is to put them under a special slab of 1%. When it can be done in the case of gold (2%), why not for food, which is more essential,” said Lahoti.
Chutney won’t be dear anymore
The GST Council has reduced tax on fried gram and dried tamarind from 12% to 5%. This is expected to pacify hoteliers who had threatened to charge tax on chutney separately. Their grouse -the input cost of chutney had gone up with the imposition of 2% GST on fried gram.
Fix GSTN portal, say traders
While the trader community has welcomed the Centre’s move to extend the deadline for filing of tax returns to t October 10, they urged the government to rectify glitches in the GSTN portal. “The government should focus on d encouraging timely compliance by providing proper infrastructure rather than extending deadlines. They must ensure the portal is d working properly,” said B T Manohar, chairman, taxation committee, FKCCI. The Centre has appointed a group of n ministers to look into the technical snag.
Handmade, khadi products exempted from tax
The tax denial satyagraha observed by artisans has yielded partial results. The council had agreed to exempt handicrafts and khadi garments from GST.But handloom products continue to attract tax. While fabrics and garments priced less than Rs 1,000 are taxed at 5%, those priced more than Rs 1,000 attact a levy of 12 per cent.