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After clarity from GST Council, food brands likely to reappear on shelves

Food brands which had disappeared from markets after the Goods and Services Tax rollout are likely to make a comeback, with the GST Council deciding to tax unregistered brands too.

According to the GST law that came into force on July 1, packaged food items with a registered trademark on the packet attracted a 5% levy. As the law didn't specify anything about unregistered products, hundreds of brands applied for deregistration and many replaced registered logos with unregistered ones.

However, the GST Council that met on Saturday issued a clarification, saying even unregistered food brands are to be taxed at 5%.

"Since it's clear that all packaged food products, irrespective of the logos, will attract tax, there's no point in printing an unregistered trademark on the packet. Authentic logos of brands will add to the product's credibility, forcing brands which had vanished to return," said Rameshchandra Lahoti, president, Bengaluru Foodgrains and Pulses Merchants Association. Lahoti, a wholesale dealer himself, said 25 of the 35 registered brands sold at his outlet had changed their logos.

While a few brands, including Bul let rice, Kesarkali rice, Lal Qilla basmati rice, Double Horse urad dal and Shivling tur dal re Shivling tur dal retained their registered trademarks as they didn't want to lose the reputation earned over the years, many had applied for deregistration. Trade bodies said manufacturers were thinking of withdrawing deregistration applications.

"Not just GST, even food regula tions bring manufacturers under the tax net if they sell packaged products. Hence, we will get to see more authentic brands in the market in the coming days," said J R Bangera, former president, Federation of Karnataka Chambers of Commerce and Industries (FKCCI).

According to the Food Safety and Security Act, it is mandatory to print details, including name of the manufacturer (refining mill) and date of manufacturing on the pack. The GST Council has made it clear that food packets with anything printed on them will attract tax.

Food merchants, however, are not happy with the Centre's move to tax packaged food, which was exempted under the Value Added Tax (VAT) regimen. "We are demanding that food items be exempted from tax. Another option is to put them under a special slab of 1%. When it can be done in the case of gold (2%), why not for food, which is more essential," said Lahoti.

Source: Times of India

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