Pre-packed labelled food items will now attract GST

As a result, GST will now be levied on pre-packaged and labelled food items such as meat, fish, curd, paneer, and honey.after the GST Council—the highest decision-making body on the levy of goods and services tax—accepted most of the recommendations of a group of ministers from states on withdrawing exemptions with a view to rationalizing the levy.

So pre-packed and labelled meat (except frozen), fish, curd, paneer, honey, dried leguminous vegetables, dried makhana, wheat and other cereals, wheat or meslin flour, jaggery, puffed rice (muri), all goods, organic manure, and coir pith compost will not be exempted from GST and will now attract a 5 per cent tax.

The panel, headed by Union Finance Minister Nirmala Sitharaman and comprising representatives of all states and UTs, on the first day of the two-day meeting, accepted the GoM’s recommendation for reviewing the exemption from GST that packed and labelled food items currently get.

Goods that are unpacked, unlabeled, and unbranded will continue to remain exempt from GST.

The GST Council also recommended a correction in the inverted duty structure for a host of items, including edible oil, coal, LED lamps, printing/drawing ink, finished leather, and solar water heaters.

The Council is likely to discuss on Wednesday the demand for an extension of compensation paid to states for revenue lost from their taxes, such as sales tax (VAT) being subsumed into a national GST.

Non-BJP ruled states such as Chhattisgarh want the compensation regime to be extended or the share of states in the GST revenues be increased to 70-80 per cent from the current 50 per cent. And to drive their point home, they cited a recent Supreme Court ruling that decisions made by the Council are not binding on states, and any decision not taken unanimously could potentially lead to the unravelling of the landmark economic reform.

The report of the state finance ministers on GST systems reforms, which recommended biometric authentication of high-risk taxpayers and real-time validation of bank accounts, was cleared by the Council.

As per data on revenue growth collated for the Council meeting, only five out of 31 states and UTs, Arunachal Pradesh, Manipur, Mizoram, Nagaland, and Sikkim, registered a revenue growth higher than the protected revenue rate for states under GST in the financial year 2021-22.