Although the Finance Minister of India, Mr. Arun Jaitley has not agreed for the exemption of GST on branded rice but has assured the Industry that they won’t face harassment from the taxman. “We don’t want Inspector Raj in India so there would be no check post for tax from 1st July even for the assessment of firms there is no need of any officer as there will be computerized system,” he clarified while speaking to the news persons on Goods and Services Tax (GST) related queries recently. Both TM and registered brand will be included as registered brand and therefore attract GST of 5%. Any product that is classified in trademark class 30 would automatically fall into this category. However earlier the Honorable Finance Minister, Mr. Arun Jaitley had said that the prices of food grains, especially wheat and rice, will come down as they will be exempt from GST.
The Punjab Rice Millers Association President, Mr. Tarsem Lal Saini confirmed the following in respect to rice in particular:
- Any firm name or owner name that is not registered a brand; no tax on that product
- Any brand name which distinguishes from others by the specific name then it is registered brand name; need to pay tax of 5% GST.
But as a norm, a processor has to put several information such as name of the company, date of packing etc. as per requirement of weights and measures department and Food Safety and Standards Authority of India on the rice pack thus making the rice pack as ‘branded’ and therefore inviting taxes. The AIREA President, Mr. Vijay Setia, who is very appreciative of the central government’s efforts said, “GST is a giant step forward for the entire rice industry that will offer a level playing field by working on ‘One Country One Tax’ principle.” But he expressed some reservations over this saying, “When branded rice is going to face 5% GST and 4% additional taxes are to be collected over it, it means the state government is trying to defeat the policy of Government of India and GST. I feel a strong protest is going to erupt over this and government would be taken for a surprise.”
But in the recently concluded CII event, Mr. Hasmukh Adhia Revenue Secretary responded to GST concerns of India Inc. and clarified the definition of Branded Food Grains. He explained the definition of branded food grains saying that just packing of food grains in packets of different weights will not attract any GST. Only if some trade-mark is used and a premium is charged to the customer on the account of a brand value, than it will attract GST of 5%. Moreover since the producer is paying a GST on the advertising and marketing of the branded rice than he can claim input tax credit incurred on it. This should dispel some doubts over 5% GST on branded rice for the moment.