Kerala

Confusion persists over 5% GST exemption

Confusion persists over the purported exemptions in the implementation of the 5% GST hike in the State, even as Finance Minister K.N. Balagopal attempted to clear the air on the issue on Wednesday.

Mr. Balagopal told a press conference here that the government had never claimed that the 5% GST rate on pre- packaged, unbranded food items would not be implemented in the State. The State’s stand is that unbranded essential commodities that were not taxed earlier should not be taxed now, he said.

“’What the Chief Minister said yesterday (Tuesday) and what I said in the Assembly are the same thing: The State’s stand is that essential commodities such as rice and pulses packed and sold by small-scale producers and Kudumbasree units should not be taxed. The State has upheld this view in the GST Council and before committees on GST rates,” Mr. Balagopal said, adding that items sold loose or re-packed in 1 kg or 2 kg packets should not be taxed.

At the same time, the government will sternly tackle attempts to misuse the tax rate hike to jack up prices of essential commodities, he said.

Notification

Following the Central notification on the tax rate hike, the Kerala government also had issued a similar notification implementing the 5% tax hike dated July 18. Which means, the GST Council decision is already in effect in the State.

Nearly 75% to 80% of the public depended on shops with an annual turnover of up to ₹40 lakh, which are exempted from GST, or those with a turnover up to ₹1.5 crore, which come under the composition scheme under the GST Act, for their essential purchases. These shops cannot collect GST, he pointed out.

Mr. Balagopal wanted the Centre to bring more clarity on the decision regarding the 5% tax rate hike. Confusion persists over the initial notification and the subsequent clarification issued by the Centre on the tax rate hike, particularly over the application of the Legal Metrology Act regarding 'pre-packaged and labelled commodity, according to him.

(The Act defines “pre-packaged commodity” as “a commodity which without the purchaser being present is placed in a package of whatever nature, whether sealed or not, so that the product contained therein has a pre-determined quantity.”)

These matters will be taken up at the next GST Council meeting scheduled to be held in the first week of August, he said.

Traders confused

Meanwhile, the trading community remains perplexed over the implementation of the tax rate hike. “Traders are confused as there is a lack of clarity on the issue,” S. S. Manoj, national secretary of the Confederation of All India Traders (CAIT), said. The CAIT has announced that it would stage protests by traders in Madurai, the venue of the next GST Council meet.


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Printable version | Jul 27, 2022 9:23:13 pm | https://www.thehindu.com/news/national/kerala/confusion-persists-over-5-gst-exemption/article65690743.ece