An Agro-food Chamber wants branded essential food products exempt under GST

The Agro-food Chamber of Commerce and Industry of Madurai has requested GST exemption. It wants the government to exempt all the branded necessary food products from the levy of GST. 

It wants the branded products to be treated at par with the unbranded ones. The Chamber made its representation in a pre-budget memorandum for 2022-23 before the Union Finance Minister Smt. Nirmala Sitharaman. S Rethinavelu is the President of the Chamber.

The Chamber stated that it was a long pending request and represented the farming sector and agro-food industry. The President pointed out that no GST is charged when rice and pulses are sold as unbranded. But where it gets tagged with a brand, 5% GST gets levied. 

He opined that it makes the branded sales of agro-food products costly. In many circumstances, brands have disowned their names with a disclaimer to avoid a GST levy or, in other words, to avail GST exemption.

The government must support branded food products sold by companies and traders by exempting them under GST. Tagging a food product with a brand will ensure that these sellers meet the quality standards for consumers’ benefit. It will also promote the brand name in the market, this increasing demand.

Furthermore, when companies disown their brand names with the disclaimer of claiming tax exemption, such names get misused in the market.

The Chamber pointed out another issue on e-way bills. The CGST Circular no. 10/2019, issued on 31st May 2019, contains vehicle checking, survey, raids, and inspection guidelines. A penalty of 200% shall be imposed if any mistake is found in the e-way bill from 1st January 2022. The Chamber finds the move a draconian one and wants it to be withdrawn at the earliest.

The President stated that a taxpayer generates an e-way bill from the government portal after entering information on vehicle registration number, places of origin and destination and gets the validity of the e-way bill upon entering the distance. Where tax is Rs.1 lakh or more for a consignment of goods, he further states that it is unacceptable that the officer is not explaining to the consignee before taking action with a double penalty charge.

The Chamber has further requested the government to levy a single GST rate for products covered under one HSN chapter for the convenience of businesses. It also wants the Cereals, Pulses and Staples from the Essential Commodities Act to be deregulated and wants the cess charged for sale outside the Agricultural Produce Marketing Committees abolished.

Moreover, the representation highlights that the Chamber wants the government to increase the threshold limit for mandatory GST registration from the present Rs.20 lakhs to Rs.40 lakh for service providers.

For any clarifications/feedback on the topic, don’t hesitate to contact the writer at annapoorna.m@cleartax.in.