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How GST Will Serve the Food Industry!



As earlier discussions by experts have claimed, implementation of the GST may mark a rise in food prices at its initiation. However, the proposed tax shall bring several benefits for the consumers and the industry, alike. Many industry involved experts have cited their opinions and concerns on GST following its announcement.

One of the biggest significance lies over the agricultural products, which after the implementation of the GST will be able to expand its reach as transportation carrying perishable commodities shall be able to cover further distances with none hindrance whatsoever.
Piruz Khambatta, chairman at Ransa, and chairman at the CII National Committee on Food Processing said,

The biggest pro of GST shall be that of a single tax which will get rid of the cascading effects of multiple taxes. Hence, it will be only value addition that will be levied at each point. Globally, this is considered as a healthy practice. However, if the overall GST isn’t low for the food processing sector, it shall lead to an increase in inflation and synonymously will not be of any benefit to the farmers or consumers.

Angshu Mallick, CEO at Adani Wilmar added that he is quite happy about the GST’s arrival. However, there has been no clarity over certain taxes being merged, such as the mandi tax. He rigorously pointed concerns on these types of taxes that vary State to State. He further pinned down on the significance that these taxes hold over nation-wide business and commerce.

One of the most straightforward words in support of the GST was raised by Vijay Setia, former president of All India Rice Exporters Association. He announced, “The multiple taxes are nothing but a route to cheat people.” He further added,

GST is an accommodating move as there shall be much more transparency within the system. There shall be a unified market in the absence of entry tax and CST.

The current on-going situation portrays the good being sold mostly within the state boundaries to avoid the payment of CST. Therefore, the arrival of GST shall open the doors for good quality products being manufactured at one part of the nation to find a market in the farthest corners of the country.

Pravesh Sharma, co-founder at Sabziwala, addressed GST as an umbrella that will be bringing transactions such as trading in pulses, cereals, and oilseeds within the tax net transactions which are at the moment happening outside tax structure. He further added that it’ll play a beneficial role to the consumers and processor.

Apart from positive statements and prediction there have been a lot of spats over GST as well.
The MD at Parag Milk Food, Pritam Shah, made it quite clear through his words that there are certain stages of procurement wherein no taxes are levied currently. However, the arrival of GST may bring up these taxes and as a result there may be a straight cost hike. He exemplified the situation through their stage of milk procurement from the farmers. He said,

There isn’t any tax over procuring milk from farmers. Currently we only pay 2 per cent central VAT over sale of milk powder to a corporation. However, when the GST gets implemented, perhaps the same tax can go up to 12.5% or 15%. This will surely hike prices on milk and milk products.

One of the major concerns shown regarding any food-related product in terms of the arrival of GST was that within tea. Currently, as per records, India consumes about 950 to 1,000 million Kilograms of tea annually. And as it is taken to be the most popular beverage after water, a lot of words has been sprawled over on exempting tea from GST. A present senior industry executive says,

If, full exemption isn’t possible, GST rate over tea must be kept on a par with the present tax rate. And the present concessional tax rate for tea sold through auctions must be allowed even under the GST regime. Otherwise, tea shall become too costlier.

With all that has been said and with all that’s left, it is safe to assume that there are a lot of possibilities which shall only become certain at the final declaration. However, the first bystander to be jolted by the arrival of the GST is the Indian economy. But that being said, it is certain that corporations and our government are both working towards a cleaner and a thriving economy.

[Image Source: India Today]

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