A move by the Centre to impose 5 per cent Goods and Services Tax (GST) on unbranded packaged rice is being viewed with concern by a section of the trade. Until now, only branded rice attracted GST.

The move to impose GST on unbranded rice and wheat flour has drawn opposition from the Confederation of All India Traders (CAIT), which claims small businesses will be affected.

“The problem with taxing unbranded but pre-packaged rice will be its monitoring. There are 55,000-60,000 rice mills. It is anyone’s guess if the effort will be worth it when the returns are going to be paltry,” said a rice trader from Andhra Pradesh without wishing to identify.

The GST will also lead to a hike in the price of rice, which is consumed in many parts of the country, he said.  

Some among the trade fear that it would needlessly arm tax officials and probably, lead to red-tapism, which had come to an end after the launch of GST. “There could be people wanting to evade the GST and some officials could connive with them,” the trader said.

There could be a leakage in the excess of 90 per cent, he said. 

BV Krishna Rao, President, The Rice Exporters Association of India and a miller, said: “The industry does not welcome the move to impose 5 per cent GST on unbranded packaged rice.”

“The GST on unbranded packaged rice could end its price difference with branded ones that are costly,” said M Madan Prakash, President, Agricultural Commodities Exporters Association. His group supplies branded and unbranded rice in the domestic market. 

Centre’s objective

However, VS Vidya Sagar, Director, Bulk Logix, said there would be nothing to worry about for the Government in achieving its levy collection target. “These days due to digitalisation, there is not much cash flow. So, things such as red-tapism may be out of the question,” he said. 

According to trade analyst S Chandrasekaran, the Centre’s objective to impose 5 per cent GST on unbranded packaged products such as rice and flour is to bring unregistered trademarks under the tax net. 

“There are quite a few brands, especially in Basmati, that are popular but come under unregistered trademarks. Now, all these people will have to pay GST,” he said. 

At the recent GST council meeting, the Centre decided to levy 5 per cent GST on pre-packed 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),  besides rice and wheat flour.

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