Ashok Gehlot writes, “Scrap GST on unbranded food items” to Finance Minister

In a letter issued earlier this month, Rajasthan Chief Minister Ashok Gehlot urged Finance Minister Nirmala Sitharaman to reevaluate the decision to impose GST on unbranded and pre-packaged food items, claiming that the State had “vehemently” rejected the levy that “is going to strike the people hard.”

Mr. Gehlot stated that the State had asked the GST Council and its Group of Ministers (GoM), which recommended the tax on unbranded food goods like curd, lassi, and food grains as a response to the COVID-19 outbreak, to postpone discussions on these levies as it was “not the proper moment.”

Ms. Sitharaman had stated that the GST Council’s decision at its meeting in late June was unanimous, with consensus from all States, and was intended to deter widespread tax fraud on July 19, a day after the GST on these commodities went into effect. She had stated that certain food goods continue to be tax-free when sold loose, a point she had made during the price increase debate in Parliament to emphasise that the needy will not be burdened by the tax.

The public will be heavily hurt by the increase in the GST rates on pre-packaged and labelled goods including buttermilk, jaggery, cereals, and flour, Mr. Gehlot claimed in a letter dated August 5 to Ms. Sitharaman. Even while all social groups consume these things, he claimed that those with lesser incomes will experience greater difficulty.

The Congress-administered State’s CM wrote to the Finance Minister requesting that he “kindly” refer to the minutes of the GoM meetings held in November 2021 and June 2022. “You will recall that Government of Rajasthan in all meetings of the GoM constituted for the deliberations on rate rationalisation had vehemently opposed any upward revision of tax rates,” the CM wrote. Additionally, we had asked the Council and GoM to postpone their discussions for at least a year following COVID because it is not the ideal time to raise taxes.

He said that although this position had been reaffirmed in the Council’s 47th meeting in Chandigarh, the Centre had nonetheless announced the tariffs on July 13 based on the Council’s recommendations. The Rajasthan chief minister stated, “We still are not in favour of this upward revision, despite the fact that the State has to make corresponding notifications to give effect to the unified rate structure.

Mr. Gehlot concluded, “…I would like to urge you to reconsider this adjustment and agenda for deliberations may again be taken up in GoMs/GST Council meeting for restoration of the tax system that was in effect prior to July 18, 2022.