The GST (Goods and Services Tax) Council meeting, held last Saturday, has decided to bring down the rates for GST for frozen vegetables from five percent to nil. This apart, there were no other decisions impacting the food sector. Hence, the food processing industry’s expectations, seeking further rationalisation of the rates, seem to have fallen flat.
A statement by the GST Council said that vegetables (uncooked or cooked by steaming or boiling in water), frozen, branded and put in a unit container and vegetable provisionally preserved (for example, by sulphur dioxide gas, in brine, in sulphur water or in other preservative solutions), but unsuitable in that state for immediate consumption has been brought down from five percent to nil.
Food industry experts like Piruz Khambatta, who is also chairman and managing director, Rasna Pvt Ltd, expressed dissatisfaction over the GST Council’s attitude towards the food industry, stating that it appeared that food was not a priority for the GST Council.
“May be in the next meeting, the Council would consider food,” he added.
Another food industry expert, Subodh Jindal, president, All India Food Processors’ Association (AIFPA), expressed dissatisfaction over the outcome of the meeting, adding that except for one subject of frozen vegetables, the large section of the primary processing industry had been left out.
The association reiterated that tax on agri-produce processed at a primary level should be exempted or lowered to encourage the processing sector and boost farmers’ incomes. There are several categories of products, like pulp and concentrates, pickling, dehydrated onion and garlic powder, which attract GST of 12 to 18 percent at present.
AIFPA said that the GST rates on these categories should either be exempted or brought down significantly.
The association, which represents the country’s food processing industry wherein 80 percent is represented by the micro, small and medium enterprises, added that even doing basic preservation of the product can attract 18 percent GST. It demanded that there should not be any tax during the primarily processing of any items, as it was not a final product and not into retail packaging.
G Chandrashekhar, economic advisor, IMC Chamber of Commerce, and an industry expert, opined, “The food processing industry is struggling to cope with GST-related issues.”
“A significant setback for the food industry is the GST on packaged branded foods. This tax is counter-productive, as it has made packaged branded foods expensive. Indian consumers are price-conscious, and a majority of consumers are unwilling to pay a premium for packaged branded foods. Indeed, many companies have withdrawn their brands. There is unfair competition between branded and non-branded food products,” he added.
As per the official data, among food processing products, about 47 items attract zero tax; 52 products are in the five per cent GST slab; 25 products are in the 12 percent category, 23 products are in the 18 per cent category, and three items are in the 28 percent tax category.
