The GST Council’s 45th meeting, held in Lucknow under the chairmanship of the Union Finance & Corporate Affairs Minister, Smt. Nirmala Sitharaman, has inter-alia made many recommendations relating to changes in GST rates on the supply of goods and services and changes related to GST law and procedure.
Ice cream parlours selling manufactured ice cream remain at 18 per cent GST as announced by the press release of the 45th meeting on 17th Sept 2021.
The apparent reasoning for the higher taxation is that these parlours are considered ‘luxuries’ relative to essential food items or are consumed by a smaller and wealthier group of taxpayers as opposed to other food items.
The ambiguity involving the different GST rates now stand stabilized by the announcement of the said press release for ice cream. However, the above logic of categorization of ice cream under different rates of tax is subject of debate. The GST is not only a revenue-raising mechanism but also a fiscal measure to discourage certain forms of consumption considered inadmissible.
The higher prices that consumers would have to pay for ice creams in a parlour may discourage the entry and continuation of domestic manufacturers in the fast-moving consumer goods industry, thus making a noticeable dent in nation-wide economic development and growth.