MADURAI: The decision of the Union government to levy 5% Goods and Services Tax (GST) on packaged food may increase the price of rice by a minimum of Rs 3 to Rs 5 per kg from Monday, Tamil Nadu rice mills association and traders said on Saturday.
Based on the recommendation of the GST Council, the Centre has issued notifications bringing essential commodities including rice and maize under 5% GST slab from July 18. All pre-packed and pre-labelled goods as defined under the Legal Metrology Act will attract the new tax.
More than 3,000 rice mills and thousands of rice merchants have urged the Centre to roll back the 5% GST and mills across the State were shut on Saturday as a mark of protest. Industry bodies have also urged that Chief Minister MK Stalin, as per the Supreme Court ruling which said that GST council recommendations are not binding on the States, must declare that Tamil Nadu will not accept the new 5% tax. State president of Tamil Nadu Vanigar Sangangalin Peramaippu Vikramaraja said the federation will hold a State-wide protest on July 22 demanding roll back of the tax.
Speaking to TNIE, M Sivanandan, State secretary, Tamil Nadu Rice Mill Owners Association, said, “In 2017, the GST Council had imposed taxes on registered branded rice, but exempted unregistered brands. But now that exemption has been withdrawn and 5% GST will be imposed on all pre-packed rice brands from July 18.”
“This would lead to rice price being hiked by an average of Rs 60 per 25kg bag which is now being sold for Rs 1,000,” M Sivanandan said.Though loose rice is exempted from the tax, nearly 95% of rice sold in the State is in pre-packed form. Also, food safety department under the FSSAI Act has asked traders to sell packed food products to ensure and hygiene.
Processing of about 25,000 metric tonnes of rice in over 1,000 rice mills in Kanchipuram, Chengelpet, Tiruvallur and Chennai were halted because of the protest on Saturday.D Thulasingam, president, Federation of TN Rice Mill Owners and Paddy Rice Dealers Association, said the 5% GST on rice bags will jack up the cost of rice by Rs 3 to Rs 5 per kg from Monday.
P Kishore, district president, Madurai rice mill owners association, said implementing 5% GST from Monday will be difficult as most mills don’t have GST numbers. More time must be given to rice mill owners and rice merchants to get GST numbers, he said.
S Rethinavelu, founder and president of AGROFOOD Chamber of Commerce and Industries, said, “At its 47th meeting, the GST Council recommended that pre-packed and pre-labelled retail packs be taxed. But now, the words “retail pack” is missing in the notification issued by the Centre giving scope for different interpretation and even “wholesale packs” will be taxable.”