08.07.2022: Pre-packaged, pre-labelled food items to attract same rate of GST as branded, says CBIC Chief Johri

Pre packaged and pre-labelled retail food items will attract GST rate at par with the branded ones, Chairman of Central Board of Indirect Taxes and Custom (CBIC) Vivek Johri said on Thursday. This means rate could be 5, 12 or 18 per cent.

GST was exempted on specified food items, grains, etc when not branded, or right on the brand has been foregone. Now, GST Council, in its meeting last month, recommended a revision in the scope of exemption to exclude from it pre-packaged and pre-labelled retail pack in terms of Legal Metrology Act, including pre-packed, pre-labelled curd, lassi and butter milk. 

The new rates are coming into effect from July 18. However, trade and industry bodies are unhappy with the decision.

“There will be no difference between branded and unbranded retail food items,” Johri told  BusinessLine. Also, exemption for items sold in loose, etc will continue.  This means pre-packed and pre-labelled curd, lassi and butter milk will attract 5 per cent GST, while ghee and butter will attract GST at the rate of 12 per cent.

Further, there will be clearer definition of ‘pre-packaged’, he said. “Packaging done in front of the consumer will not be a part of the new regime and if food items contained there is exempted, it will continue to do so,” he explained. 


According to the Legal Metrology Act, 2009 “pre-packaged commodity” means a commodity which without the purchaser being present is placed in a package of whatever nature, whether sealed or not, so that the product contained therein has a pre-determined quantity

Similarly, the Food Safety and Standards (Packaging and Labelling) Regulations, 2011 says, “Prepackaged” or “Pre-packed food”, means food, which is placed in a package of any nature, in such a manner that the contents cannot be changed without tampering it and which is ready for sale to the consumer. Pre-labelled means a pre-packed food item need to have label regarding contents, etc with a registered or unregistered brand.


Meanwhile, trade and industry bodies are unhappy about this decision. Confederation of All India Traders (CAIT) says only 15 per cent of the population in the country uses branded goods, while the rest lives on products which are pre-packed or pre-labelled. “Bringing these items in the tax slab of GST is an unjust move, which should be taken back by the GST Council and the decision should not be notified as an immediate relief,” BC Bhartia, National President, and Praveen Khandelwal, Secretary General of CAIT, said in a statement. 

They further said marking and inscription of other related information on food products is mandatory under Food Safety & Standard Act and by virtue of this, the product can’t be treated as branded. “Even if someone wants to sell any goods without a mark, he cannot sell it and as soon as the mark is applied, he comes under the purview of GST,” they said.

Indore-based Sakal Anaj Dalhan Tilan Vyapari Mahasangh Samiti surged the GST Council to roll back this decision as this will hurt small businesses and consumers in a big way.

Source: The Hindu Business Line 


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