5% GST on Pre-Packaged Food Causes Nationwide Stir

The decision to collect a 5% GST on pre-packaged and pre-labeled commodities like food grains, curd, and buttermilk has riled state businesses, with some calling for a nationwide protest against the move announced earlier this month.

Already annoyed by the nationwide ban on single-use plastic, which went into force on July 1, the traders claim their revenues have been harmed by rising inflation levels. They are requesting that the 5% tax on certain items be repealed.

The Confederation of All India Traders (CAIT) said the decision by the Goods and Services Tax (GST) Council to eliminate the exemption on pre-packaged and unbranded food goods and levy a 5% tax will harm small companies throughout the nation. 

In the following days, the group will seek talks with the Union Finance Minister and state finance ministers to encourage them to reconsider the decision, which would "empower huge brands while increasing the compliance burden for small dealers."

"The GST Council decision will result in significant commercial losses for food grain dealers across the country. It will allow large corporations to dominate the market at the expense of small producers and merchants.

Some city merchants also pointed out that implementing the tax in towns and rural regions will be difficult.

"Forget about the issues in towns and villages; this regime would result in harassment even in cities like Gurugram and Delhi." It would open the door to corruption," said Bablu Gupta, the head of the Sadar Bazar Vyapar Mandal.

They warned that traders would be forced to pass the burden to consumers. "It will be a death knell for the common man."

Instead of bringing everyday commodities into the tax net, CAIT general secretary Praveen Khandelwal believes it would be more suitable to broaden the tax net by bringing more and more individuals into the GST tax net.

"Food grains had never been taxed since independence, but for the first time in 2017, large branded food grains were brought into the tax net. However, finance minister Arun Jaitley was mindful to keep everyday essentials out of the GST tax net "Khandelwal stated.