Clarification by FM Nirmala Sitharaman on recent imposition of GST on specified food items

Last updated: 19 July 2022

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Finance Minister Nirmala Sitharaman has provided clarification regarding the recent imposition of GST on certain food items. The GST Council's decision, effective from July 18, 2022, primarily changed the method of GST application to 'pre-packaged and labelled' commodities, rather than introducing new taxes on items like pulses, cereals, and flour. This move aims to curb tax evasion, as previously, GST was only applied to branded items, leading to misuse and revenue loss. Items sold loose and not pre-packaged will continue to be GST-exempt.

Recently, the GST Council in its 47th meeting recommended to reconsider the approach forRecently, the GST Council in its 47th meeting recommended to reconsider the approach for imposition of GST on specified food items like pulses, cereals, flour, etc. There have been a lot of misconceptions about this that have been spread. Here is a thread to lay the facts: Is this the first time such food articles are being taxed? No. States were collecting significant revenue from foodgrain in the pre-GST

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FAQ :

GST has been imposed on specified food items when they are 'pre-packaged and labelled' to curb tax evasion and misuse of provisions that previously only taxed branded goods.

No, GST at 5% was initially applicable on branded cereals, pulses, and flour when GST was rolled out. The recent change alters the condition for taxation to 'pre-packaged and labelled'.

From July 18, 2022, GST applies to items like pulses, cereals, and flour when they are supplied in 'pre-packaged and labelled' form, as per the Legal Metrology Act.

No, food items sold loose and not pre-packaged or pre-labelled will not attract any GST.

Yes, the decision to change the modalities of GST imposition on these goods was a unanimous one by the GST Council, with all states present agreeing.

The changes were recommended by the Fitment Committee, consisting of officers from various states, and a Group of Ministers (GoM) on Rate Rationalisation, which was headed by the CM of Karnataka.

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CCI News Desk

Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

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