Federation of Biscuit Manufacturers of India (FBMI) has
urged the GST Council to keep biscuits in its lowest slab since biscuits
are an item of mass consumption and
higher taxation on it would adversely hit biscuit production as well as its
consumption and hence employment in the industry .
FBMI which is an affiliate association of PHD Chamber of
Commerce and Industry is of the view that lower GST rates on biscuits will
enable their availability and access within the reach of aam aadmi and that too
at affordable prices.
In a representation
sent on to GST Council by FBMI ,
it has been emphasized biscuits be taxed within the lowest slab of GST
for Foods .
It has been pointed out that almost 93% of the food
basket comprises basic food. The
government proposes to tax basic food at a lower rate under GST. Taxing the remaining 7% food items at higher
rates under GST will lead to increase in complexity, without substantial
addition to the revenues. It will also
not meet the goals of efficiency and equity.
Tax rates should apply uniformly across the entire supply
chain, from one end, to another so as to encourage value added activities in
the farm produce and food sector. GST
provides the right opportunity to correct the current anomalies. Under GST, there should be no discrimination
while taxing food products on the basis of their being branded or un-branded,
or premium or non-premium products, as this will encourage value addition
across the chain from farm to plate .
FBMI also
emphasized that multiple rates within a sector will lead to classification
disputes and complex record-keeping and compliance system. There is a
predominance of the SMEs at the retail level and they will be ill-equipped to
handle multiple rates. Thus, in the
interest of simplicity, all food items including biscuits should be taxed at a
uniform, low rate.
A higher rate of tax would impact demand in the entire
value chain. It will cut down on procurement of raw materials by biscuit
manufacturers that would adversely impact farmers across India. Lower demand will also negatively impact investments,
exports and employment in the food industry.
Lower and uniform GST rate on Biscuits will also help
India to be in line with international best practices, wherein countries such
as New Zealand, Singapore, Denmark and Japan, have a single lower VAT rate for
all goods including biscuits, though Biscuits are treated as non-taxable basic
grocery in countries such as Canada and UK.
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