Finance Minister, Nirmala Sitharaman
The finance minister said the five per cent GST imposition on certain pre-packaged items, was part of a unanimous decision by the GST Council last month in which even non-BJP ruled states were present | Pic: PTI

No GST on select items when sold loose: Nirmala Sitharaman clarifies

Finance Minister Nirmala Sitharaman on Tuesday (July 19) released a list of items that will not attract any GST when sold loose — not pre-packed or pre-labelled. The list includes items like curd, lassi, wheat, oats, rice and maize etc.

This comes amidst the disruption of Parliamentary proceedings due to protests by opposition members over inflation and GST imposition on some new items.

The finance minister while defending the five per cent GST imposition over certain pre-packaged and labelled items like cereals, rice and flour, said it was part of a unanimous decision by the GST Council last month in which even non-BJP ruled states were present.

Also Read: Varun Gandhi criticises 5% GST on pre-packaged food items

In a series of tweets, Sitharaman said: “Is this the first time such food articles are being taxed? No. States were collecting significant revenue from food grain in the pre-GST regime. Punjab alone collected more than ₹2,000 crore on food grain by way of purchase tax. UP collected ₹700 crore.”

“Taking this into account, when GST was rolled out, a GST rate of five per cent was made applicable on BRANDED cereals, pulses, flour. Later this was amended to tax only such items which were sold under REGISTERED brand or brand on which enforceable right was not foregone by supplier,” she wrote.

Sitharaman tweeted that many reputed manufacturers and brand owners started misusing the provision, which led to a gradual fall in GST revenues from these items.

Also Read: 5% GST on pre-packed, labelled flour, pulses of less than 25kg, curd less than 25 ltr

“This was RESENTED by suppliers and industry associations who were paying taxes on branded goods. They wrote to the Government to impose GST uniformly on all packaged commodities to stop such misuse. This rampant evasion in tax was also observed by States,” she added to her Twitter thread.

After recommendation by various state officers, the GST Council took the decision in the Council’s 47th meeting, she wrote. “With effect from July 18, 2022, only the modalities of imposition of GST on these goods was changed with no change in coverage of GST except 2-3 items,” Sitharaman added.

The finance minister concluded by saying that the decision was a much-needed one to curb tax leakage and was taken after the complete consensus of all members.

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