Move to hike GST on coconut oil 'anti-South', says Tamil Nadu FM

The Tamil Nadu government is crying foul over the proposal to raise Goods and Services Tax (GST) on coconut oil, calling the move “anti-poor” and “anti-South”. The state is one of the largest producers of coconuts and coconut oil.

“How can you classify something which is clearly edible as effectively non-edible (based on the size of the container) for the sake of levying GST?… It is an arbitrary cut-off point, bereft of human compassion and basic logic,” the state’s finance minister Palanivel Thiaga Rajan, who was unable to attend Friday’s GST Council meeting, said in a written submission.

The GST Fitment Committee has recommended that coconut oil would be considered “edible” and attract GST of 5 per cent when packed and sold in a unit container of 1000 ml or above. If packed and sold in a container of less than 1000 ml, it may be classified as hair oil attracting a GST of 18 per cent irrespective of its actual end use.

#TamilNadu strongly objects to proposal to classify coconut oil in container of less than 1000ml as hair oil with GST of 18pc “irrespective of actual end use”. @ptrmadurai has termed it “anti-poor, anti-southern states and anti-Indian”.
(This is worth a read)#GSTCouncil pic.twitter.com/Ku89Tdg3Du

— Ranjitha Gunasekaran (@ranjim) September 17, 2021

“What about imported oils such as palm oil or olive oil, which the Centre in its wisdom has chosen to exempt from import duties?” the minister asked. “Why is a south Indian oil being discriminated against while oil imported from foreign countries gets the 5% rate in ANY QUANTITY.”

He further called the proposal “blatant discrimination”, asking “how many families in the southern states cook with coconut oil? The answer is very many.”

The state finance minister also opposed bringing petrol and diesel under the ambit of GST, saying: “Taxation of petrol and diesel remains one of the last vestiges of any state’s right to manage their own revenues, since the advent of GST stripped away most of the small range of rights originally written into the Constitution. As such we are reluctant to give up any of these few remaining rights, and so are fundamentally opposed to bringing these products into the ambit of GST.”

Kerala wants GST compensation extended

Kerala finance minister K.N. Balagopal on Saturday called for extending GST compensation beyond June 2022, pointing out that the state is already grappling with revenue shortfall.

He told the media that Kerala was not getting its due in the wake of the 15th Finance Commission devolution recommendations. “Kerala will be receiving GST compensation of over Rs 13,000 crore and another one-time grant of over Rs 19,000 crore in the current fiscal ending March 2022,” he said, adding that if GST compensation ends next year, then the state will face further revenue shortfall.

Also read: GST meet: Online food orders to get costly, petrol not under tax regime