FBMI pushes for low tax on biscuits under GST

FBMI pushes for low tax on biscuits under GST

Biscuits, items of mass consumption, must be taxed in the lowest slab: FBMI

The Dollar Business Bureau

Biscuit manufacturers, in their request to the GST council, have asked for biscuits to be kept in the lowest tax slab, citing possible fallout in consumption, production and employment as consequences of higher taxation under the new tax regime. 

The proposed four tax slabs in the GST taxation structure are 5%, 12%, 18% and 28%. 

The demand was presented to the GST council by the Federation of Biscuit Manufacturers of India (FBMI). "Almost 93 percent of the food basket comprises of basic food and the government proposes to tax basic food at a lower rate under GST," the FBMI said. 

Since it would be unnecessarily inefficient and complex to tax the remaining 7% of the basket at higher slabs, without yielding much revenue, FBMI proposes that all food products be taxed uniformly irrespective of whether they fall in the premium or non-premium, branded or unbranded category. 

Multiple economic advantages of adhering to low tax rates for biscuits were quoted by FBMI. It would enable value addition to farm produce and ease compliance with international standards. 

Biscuits being a product of mass consumption with little margins for the manufacturers, it is argued that high tax rates could be detrimental for the growth of the 36,000 crore industry. 

Earlier in February 2017, the industry had unanimously pleaded for a waiver of taxation under GST, for the low price high nutrition (LPHN) variety of biscuits. These are the biscuits that usually cost Rs 2-5 per pack, and are said to be one of the rare hygienically manufactured low-priced food products. All biscuits retailed under Rs 100 per kg fall in this category.

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The Dollar Business Bureau - Feb 18, 2017 12:00 IST