GST may be imposed on rice packed in more than 25 kg
29-Jul-2024 11:21 AM
New Delhi. GST is likely to be imposed on rice sold in packing (sack) of more than 25 kg, which will affect the domestic market price. In fact, in the suggestion given for this, rice has not been considered an agricultural farm product.
Based on this recommendation of the GST Council, the latest circular issued by the Central Board of Indirect Taxes and Customs (CBIC) seems to indicate that if rice packed in more than 25 kg is sold in retail (price) form, then it may be taxed because it has been considered outside the category of agricultural farm product.
Only agricultural farm products, that is, commodities produced in the fields, have been classified as farm products, on which there is a provision of not imposing GST. In fact, there is a consideration to keep rice in the category of flour and pulses on which GST is applicable.
The Board and the GST Council believe that the basic agricultural farm commodity is paddy, while rice is its processed product. Similarly, wheat is the basic and flour is the processed product, just like pulses are the basic product and dals are its processed product.
If rice packed in more than 25 kg is sold in loose form, then GST may be applicable on it. In this regard, responses from the industry and trade sector are awaited. Critics say that this decision of the government may increase the domestic market price of rice further, while it is already running at a very high level.
The government's effort to control food inflation will also be affected by this. Commercial export of broken rice and non-basmati white rice has been stopped for the purpose of controlling inflation.
In the circular issued by the CBI, it was said that GST was to be effective from July 18, 2022 on cereals like pulses, rice-wheat, flour etc.
when it is pre-packaged and labeled, provided its packing is done in a single package in a quantity of more than 25 kg. GST may be applicable on its sale in loose form. The whole situation is expected to be clear soon.