The GST council has recommended 5% tax on branded rice while exempting the cereals from its gambit. The rice processor currently has to disclose various types of information such as name of the company, date of packing, net weight etc. on the rice packet as per the requirement of Weights and Measurement Department and Food Safety and Standards Authority of India. This would make the packed rice as ‘branded’ thus inviting taxes. Combined Haryana State taxes of 4% added to GST rate of 5% would make this staple food out of reach for the poor.
Mr. Pradeep Gupta of the Shree Hans Rice & General Mills expressed his concerned to Riceoutlook magazine over the ever pending taxation issues with the State Government that makes rice sold to economically weaker section expensive. Till now some States like Punjab and Haryana had high local taxes such as market fee of 2% and rural development cess of 2% etc. on grain trade. It was expected that all these would be merged in the GST or drastically reduced in the post GST roll out. Mr. Gupta explained that Punjab has recently abolished 2% Mandi Fees and 2% rural development cess while there is no action in Haryana on the same. Because of higher taxation, processors or millers are not willing to set up units in this key rice producing state. These variations in the taxes in the neigbhouring states would provide undue advantage to one state while dealing with their common buyers such as Iran, UAE, Saudi Arabia and others. He is hopeful that Haryana Government would toe the line taken by the Punjab Government and abolish this additional 4% tax on rice to create an equal level playing field for both states. Mr. Gupta remains optimistic that the next GST council meeting would address the issue as the government has already promised zero tax on rice under GST regime.