Union Finance Minister Nirmala Sitharaman on July 19 said that States levied gross sales tax or VAT on foodgrains within the pre-GST regime and the current levy on cereals, pulses, flour, curd and lassi is an train to curb tax leakage
Union Finance Minister Nirmala Sitharaman on July 19 said that States levied gross sales tax or VAT on foodgrains within the pre-GST regime and the current levy on cereals, pulses, flour, curd and lassi is an train to curb tax leakage
GST on pre-packaged items/meals packets was levied after some States gave suggestions of shedding revenues they beforehand earned from levy of VAT on meals gadgets, a prime authorities official mentioned.
The choice to levy the tax, which got here into impact from July 18, will not be that of the Union Government however of the GST Council. It was thought-about by the Fitment Committee that has officers of some States and the Centre.
It was additionally advisable by a gaggle of ministers (GOM) consisting of minister representatives of some States and eventually by the GST Council, Revenue Secretary Tarun Bajaj instructed PTI.
Also learn: Explained | What is the controversy over GST levies on meals?
In all, the GST Council, the brand new constitutional mechanism within the nation for taking choices on GST, took a consensus view on levy of the tax, he mentioned.
The panel, which is headed by the Union Finance Minister and includes representatives of all States and Union Territories, takes choices when everyone seems to be onboard, he mentioned.
However, pulses, wheat, rye, oats, maize, rice, flour, suji, besan, puffed rice and curd/lassi when bought unfastened and never pre-packed or pre-labelled won’t entice any GST.
The feedback come towards the backdrop of Opposition events led by the Congress stalling functioning of Parliament within the first week of the Monsoon Session over levying of GST on every day use gadgets and different points.
While States dominated by non-BJP events had been occasion to the choice taken on the levy of the tax on the Council’s assembly in Chandigarh final month, vociferous protests towards the levy got here simply because the Monsoon Session of Parliament was to begin.
“Before GST came into place [on July 1, 2017] during the VAT regime, this [tax on essentials] was there in many States. States were getting revenue [from levying VAT on food items]. Once in 2017, this new goods and services tax [GST] regime came, it was envisaged that this would continue but it was levied only on branded products when rules and circulars came out,” Mr. Bajaj mentioned.
The guidelines offered that the GST won’t be levied on pre-packed items if the manufacturers gave up actionable claims on the model. This led to among the well-renowned manufacturers starting to promote this stuff in packets that carried their model however no actionable declare on it and so didn’t entice the 5% GST.
“I don’t want to take names but very renowned brands in the country were not paying taxes using this particular loophole. And this was creating an arbitrage because in a FMCG product like pulses or rice which is indistinguishable, 5% is a huge margin,” he mentioned.
Naturally, the businesses promoting merchandise below manufacturers complained.
“States also gave us feedback that we used to get a lot of money before GST came in and that we should do something,” he mentioned.
He, nevertheless, didn’t title the States.
Eliminating the excellence between branded and non-branded merchandise was additionally an train to simplify the tax regime and create a degree taking part in subject with minimal risk of authorized challenges. It offers parity to all manufacturers and corporations by eradicating any disparity, he mentioned.
“So, people were misusing it. Secondly, States gave us feedback that they were losing revenues on it and not getting revenues they used to get in pre-GST regime,” he mentioned.
“So the Fitment Committee [composed of Central and State officials] sat down, got feedback. Then the Group of Ministers [from different States] sat down, got feedback. Then the Council discussed it. So it was a conscious decision taken… it was a unanimous… consensus decision,” he famous.
Mr. Bajaj mentioned the GST Council has been working with full understanding of points and taking choices addressing issues of even one dissenting State.
“I have seen so many decisions that we did not take it forward in a meeting because one State had concerns. The approach is that either we will address the concern or not take it forward,” he mentioned.
Union Finance Minister Nirmala Sitharaman on July 19 said that States levied gross sales tax or VAT on foodgrains within the pre-Goods and Services Tax [GST] regime and the current levy on cereals, pulses, flour, curd and lassi is an train to curb tax leakage.
The Fitment Committee, which first examined the problem, comprised officers from Rajasthan, West Bengal, Tamil Nadu, Bihar, Uttar Pradesh, Karnataka, Maharashtra, Haryana and Gujarat.
Its suggestions had been examined by a Group of Ministers composed of members from West Bengal, Rajasthan, Kerala, Uttar Pradesh, Goa and Bihar and was headed by the chief minister of Karnataka.
The GoM suggestion was positioned earlier than the GST Council, the best decision-making physique of the brand new tax regime, at its assembly in Chandigarh final month.
Source: www.thehindu.com