Traders’ body opposes 5% GST on packaged products; GST on pre-packed labelled food items increase compliance burden

The Confederation of All India Traders (CAIT) has criticised Central Board of Indirect Taxes and Customs (CBIC) for deciding to impose a 5 percent GST on pre-packaged and pre-labelled products.

Traders’ body Confederation of All India Traders (CAIT) stated on Monday that the decision to impose a 5% GST on pre-packaged and labelled food items will result in a loss of business for food grain traders, increase the burden of compliance, and raise the cost of unbranded everyday necessities.

CAIT urged the Goods and Service Tax Council and Finance Minister Nirmala Sitharaman to rethink their decisions. According to CAIT, the decision will enable large brands to gain market share at the cost of small producers and vendors.

The association’s Punjab wing has written a letter to Union finance minister Nirmala Sitharaman pleading with her to reconsider the decision.

The shop owners say that the higher price of finished goods will reduce sales and cause them to lose clients to large corporations. Small business owners who sell locally branded goods won’t be able to survive the pricing war.

Food goods like meat, fish, curd, paneer, and honey that have been pre-packaged and labelled have been included in the scope of the GST. This comes after the GST Council approved the majority of the suggestions made by a group of state ministers about the removal of exemptions and the rationalisation of the tax.

According to Harkesh Mittal, president of CAIT in Punjab, “In recently held meeting, the GST Council has decided to levy a 5 percent GST on pre-packaged and pre-labeled food products and other like items. The traders, who are already going through a lot of hardships and a financial crisis as a result of the long-lasting effects of the coronavirus, are quite angry about this decision. The prices of things like pre-packaged lassi, butter, milk, lentils, and spices would rise as a result of the new decision to tax them, and the end traders who deal in these items will suffer greatly. Until now, these items were exempt from the GST.”

“Traders fraternity is not against GST, but the government and tax authorities should investigate other ways to broaden the tax net instead of including the things that require a GST exemption,” Mittal further emphasised. There are a large number of unregistered firms whose goods and services are subject to GST but who do not pay it; as a result, these enterprises should be included in the tax system rather than having their goods taxed.