GST Council has announced 12 per cent GST rate for Indian traditional Namkeen, Savories, Farsan, Potato Chips, Banana Chips etc. This rate should be reduced to 5 per cent to maintain uniformity with GST rate for Sweet Meats & Mithai, stated President – Snack Food Association of Maharashtra, Ajit Mota.
The GST rate for Namkeen is 12 per cent (double from the present tax) but industry hardly receives any input credit as its raw materials are agro based. There is no tax on raw materials like potato, banana, maida, besan, salt, pulses etc. There is only a marginal tax on masala. Namkeens and Sweets are sold from the same shop and are interrelated products from the point of view for common men consumption. With 12 per cent GST, the effective prices of all the products would increase by at least 6 per cent to 8 per cent.
Sweets, Namkins, Potato Wafers, Banana Wafers and other similar products made from similar ingredients are sold from same shops. So it would be quite difficult for shop owners to maintain exact bifurcation of sales. Thus it leaves a big avenue for tax officials for manipulations and corruptions.
Ajit Mota further stated that pan-India industry size for Namkeens is large with 8 to 10 per cent growth rate per annum. 95 per cent of the industry has been located in the unorganized sector. Mainly this industry consists of home units, cottage units and small scale units. These units operate at a very thin margin. Thus, the industry could not sustain 12 per cent GST rate, resulting in closing down of units, which would lead to large scale unemployment.
Secretary, Shree Mumbai Mishtan Vyavasai Sahakari Mandal Ltd., Pradeep S. Jain urged the authorities to reduce the GST rate for Namkeen, Potato Wafer, Banana Wafer to 5 per cent from the proposed 12 per cent. He has asked the authorities to merge it with the rate of Sweet Meats, Mithai and i.e. 5 per cent.
Committee Member of the Snack Food Association of Maharashtra, K.L. Daga informed that there is no clarity of GST rate on hot snacks like Dhokla, Jalebi, Samosa, Kachori etc. If the hot snacks are consumed in AC restaurants, it would attract 18 per cent GST rate. It is 5 per cent on Vada-Pav. Thus proper clarification of GST on hot snacks is still awaited from authorities.