Opposition stand on unbranded food GST baffles govt – Times of India
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NEW DELHI: The stand taken by Opposition parties on GST for unbranded packed food is seen as a “political rethink”, leaving the finance ministry baffled as states are also worried over pilferage of taxes and had agreed to the levy at last month’s GST Council meeting in Chandigarh.
On Monday as Parliament reconvened, several Opposition parties, however, demanded a rollback on the recommendation finalised by the all-powerful Council. Sources were quick to point out that barring once, on the issue of lottery, the GST Council has taken unanimous decisions.
In this case, the move followed recommendations by a group of ministers comprising representatives from seven states — Opposition-ruled Kerala, Rajasthan and West Bengal, along with Karnataka, Bihar, Goa and Uttar Pradesh.
While unbranded and packed food items were within the purview of GST, the Council decided to exempt it, resulting in misuse and evasion. “The prescription was wrong as it was left to companies to say that they had no rights over the brand. This led to companies misusing it and there were several representations from companies in states such as Tamil Nadu and Jharkhand to change it,” explained a tax officer.
Another government source said that some top names in the basmati rice were manipulating the system and using gaps in the legal provisions to escape taxes. Officials pointed out that in several cases, it is not as if the products in question were completely exempted from taxes in the period before GST kicked in. Economists argued that once a product comes into the GST net, manufacturers and sellers down the line also get input tax credit.
On Monday as Parliament reconvened, several Opposition parties, however, demanded a rollback on the recommendation finalised by the all-powerful Council. Sources were quick to point out that barring once, on the issue of lottery, the GST Council has taken unanimous decisions.
In this case, the move followed recommendations by a group of ministers comprising representatives from seven states — Opposition-ruled Kerala, Rajasthan and West Bengal, along with Karnataka, Bihar, Goa and Uttar Pradesh.
While unbranded and packed food items were within the purview of GST, the Council decided to exempt it, resulting in misuse and evasion. “The prescription was wrong as it was left to companies to say that they had no rights over the brand. This led to companies misusing it and there were several representations from companies in states such as Tamil Nadu and Jharkhand to change it,” explained a tax officer.
Another government source said that some top names in the basmati rice were manipulating the system and using gaps in the legal provisions to escape taxes. Officials pointed out that in several cases, it is not as if the products in question were completely exempted from taxes in the period before GST kicked in. Economists argued that once a product comes into the GST net, manufacturers and sellers down the line also get input tax credit.
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