The 5% tax on hulled grain, under the Goods and Service Tax (GST) to be rolled out from July 1, is going to be a dampener for many. For the first time, millet rice is coming into the tax bracket, and this will make it dearer for consumers.
Known for its nutritional value, millets are fast replacing traditional paddy rice — known for its high glycemic index — across the country. The production and area under cultivation of this dry land crop had dwindled over decades before picking up steadily when the demand for urban consumers increased. The 5% tax is now being seen as an impediment both by the millet-based entrepreneurs as well as scientists working on the crop.
The GST Council, in the third week of May, notified 5% tax on cereal grain, which is hulled. An exemption was given to paddy rice, which is also hulled. Of the nine type of millets cultivated in the country, six require hulling and are termed as husked or hulled millets, or millet rice. Foxtail millet, Barnyard millet, Little millet, Kodo millet, Proso millet and Browntop millet cannot be consumed without hulling, while the other three — ragi, jowar and bajra — can be ground into flour and consumed without hulling.
“A lot of people are now turning to millet because of the increasing incidence of lifestyle disorders. Bringing millet under the tax bracket would be an impediment for the growth of millet-based businesses that are working on very thin margins already. A ₹5 increase on a ₹100-worth millet product will also reduce consumption since it is a cost-sensitive market,” Arun Kaulige of Kaulige Foods told The Hindu . “Since the millet business is highly unorganised and still nascent, we do not have much say either. However, we plan to approach the Finance ministry seeking relief,” said Mr. Arun, who incidentally has also started an online campaign seeking exemption for millet from GST. “The tax on millet will work at cross purposes, especially when the Union government is trying to promote production and consumption of millets through Initiative for Nutritional Security through Intensive Millet Promotion, and State governments are also offering financial assistance to farmers,” said Krishnaprasad of Sahaja Samruddha, which has been working for millet promotion.
Dry land crop millets are also being seen as an alternative to many water-intensive crops such as paddy and wheat. While it causes less burden on the State’s exchequer since no irrigation facility is required, its health benefits are very high, experts point out.
The Hyderabad-based Indian Institute of Millets Research (IIMR) is set to seek exemption of GST on millets. According to the Director of IIMR, Vilas A. Tonapi, the GST on millet rice will not only affect consumers, but also farmers. “Increase in cost will hamper production. Since millets are nutritionally superior to rice, they should be exempted from tax, and not discriminated against.” He also said that the institute is in the process of approaching the authorities concerned, seeking exemption to millet rice on the lines of exemption given to paddy rice.
The Karnataka Hosiery and Garment Association, along with wholesalers, retailers and manufacturers based in Bengaluru, has urged the Union government to keep the tax rate on garment and textile industry at 5% when the GST rate is decided on the industry. It said that the garment industry is one of the largest industries after agriculture, providing employment, and textile and apparel industry is largely unorganised. The current incident of excise duty is around and VAT rates are around 5 to 5.5 %.
Town Hall meeting today
Finance ministry Revenue Secretary Hasmukh Adhia will be holding a meeting with tax assessees and trade representatives in the city on Tuesday. The meeting has been jointly organised by Chief Commissioner of Central Excise and Service Tax, and Commissioner of Commercial Tax at Sir Puttanna Chetty Town Hall as part of the outreach programme.
Hotels to down shutters
Over 6,000 hotels and restaurants are expected to close their shutters on Tuesday in protest against the proposed GST rates for the sector. H.B. Rajeev Shetty, Vice President of the Bruhat Bengaluru Hotels Association, said the tax would see their current rates increase from around 4% to 12% (mid-size hotels) and 18% (larger hotels). “We will have no choice but to pass it on to consumers. The price for a plate of food will increase by at least ₹5. This will see a large-scale loss of customers and eventually jobs,” he said.