GST Council meet on August 27: Packaged food industry body seeks rate reduction

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The All India Food Processors’ Association (AIFPA) has written to the Food Processing Industries Ministry and Finance Ministry seeking lower the goods and services tax (GST) imposed on packaged foods.

The industry body has requested for GST rates for packaged foodstuff such as snacks, instant meals, ready-to-eat meals, cereals, pickles and chips, etc., to be reduced to 5 percent from 12 percent – on par with unbranded food items, Mint reported.

AIFPA, which represents several large and regional packaged food companies in India such as Britannia Industries, MTR, Mondelez India, ITC, PepsiCo, Bikanerwala, Prataap Snacks, etc, said the reduction would help expand the sector in India.

This comes just ahead of the GST Council meet scheduled on August 27 and as companies struggle to deal with disruptions due to the coronavirus pandemic.

The difference in GST rates for non-branded (vegetable chips, namkeens, etc.) and packaged items has “…encouraged production of unsafe and unhealthy products … shifted consumption from branded to non-branded products, which reduces revenue to the government,” the letter signed by AIFPA president Subodh Jindal said.

AIFPA has suggested the government remove food processing items from the ‘luxury products’ tag as it is an “essential step in making natural agri-produce ready for human consumption.”

The letter further compares taxation rates on similar items globally noting that around 74 percent countries have no GST on food and 92 percent have a maximum GST rate of 10 percent. It added that rate reduction would also reduce agri-produce linked wastages.

Besides AIFPA, the Indian Beverage Association (IBA) – representing ITC, Dabur India, Coca Cola and PepsiCo, has sought lower GST tax on aerated beverages by removing the product from the ‘sin’ category, reduction of GST on packaged water and GST rate of 5 percent (from 12 percent) on juice-based beverages.