Quick Summary
The Food Ministry has forwarded the edible oil industry's long-standing demand for lifting restrictions on GST refund claims to the Finance Ministry, raising hopes that the GST Council may take up the issue in its next meeting. "We have sent it to the Ministry of Finance, once this GST committee meets to work on the declaration about reduction in the rates, I am sure they will keep that in mind. Hopefully, it may take up in the next meeting,"Food Secretary Sanjeev Chopra notified on Tuesday.
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FAQ :
The edible oil industry is demanding the lifting of restrictions on GST refund claims for accumulated Input Tax Credit (ITC), which have been in place since July 2022.
Edible oils are taxed at 5% GST, while packaging and processing materials are taxed at higher rates (12-18%). The restrictions prevent companies from claiming refunds on the excess tax paid on inputs, leaving them with unutilised tax credits.
Small and medium enterprises (SMEs) and domestic manufacturers in the edible oil sector have been particularly hit by the refund restrictions.
Restoring ITC refunds could lead to policy stability, encourage new investments, improve the economic viability of domestic producers, and help stabilise consumer prices.
The government is implementing the Vegetable Oil Products, Production and Availability Regulation Order, 2025, requiring producers to register and submit monthly reports on production, sales, and stock levels.
The Food Secretary indicated that the issue might be taken up in the next GST Council meeting, following discussions by a GST committee on rate reductions.
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