Govt Plans to Impose 5% GST on Unbranded Packaged Rice; CAIT Raises Concerns

A section of the society is concerned about the Centre's decision to impose a 5% Goods and Services Tax (GST) on unbranded packaged rice. Until now, only branded rice was subject to GST. The Confederation of All India Traders (CAIT) has objected to the imposition of GST on unbranded rice and wheat flour, claiming that it will harm small businesses.

"The issue with taxing unbranded but pre-packaged rice is that it will be difficult to monitor." There are between 55,000 and 60,000 rice mills. "It's anyone's guess whether the effort will be worth it when the returns will be paltry," said an Andhra Pradesh rice trader.

According to him, the GST will raise the price of rice, which is consumed in many parts of the country. Some in the trade are concerned that it will unnecessarily arm tax officials and likely lead to red-tapism, which was reduced following the implementation of GST. "There may be people who want to evade the GST, and some officials may collude with them," the trader speculated.

According to him, there could be a leakage of more than 90%. "The industry does not welcome the move to impose 5% GST on unbranded packaged rice," said BV Krishna Rao, President of the Rice Exporters Association of India and a miller.

"The GST on unbranded packaged rice could eliminate the price difference with expensive branded rice," said M Madan Prakash, President of the Agricultural Commodities Exporters Association. In the domestic market, his company sells both branded and unbranded rice.

However, VS Vidya Sagar, Director of Bulk Logix, stated that “the government would have nothing to worry about in meeting its levy collection target. "Cash flow is scarce these days due to digitalization." "Things like red tape may be out of the question," he said.

According to trade analyst S Chandrasekaran, the Centre's goal in imposing 5% GST on unbranded packaged goods such as rice and flour is to bring unregistered trademarks into the tax net. "There are a number of popular brands, particularly in Basmati, that are protected by unregistered trademarks." "All of these people will now have to pay GST," he explained.

The Centre recently decided to levy 5% GST on pre-packaged and labelled food items such as meat, fish, curd, paneer, honey, dried leguminous vegetables, dried makhana, wheat and other cereals, wheat or meslin flour, jaggery, puffed rice (muri), in addition to rice and wheat flour.