GST impact: After GST, many local food brands do a vanishing act
BENGALURU: Following the imposition of the tax on goods and services (GST), several local food brands are withdrawn from the market. This left the usual buyers of packaged food products like rice, dal, Atta and sooji perplexed about their sudden lack of availability.
An example: in one of the wholesale establishments that sold 35 trademarks, 25 changed the logo.
The mother trademark of Indian rice has become IM and Angoor turdal has been changed to the “PCR” brand. Reason: Foods packaged with a trademark or registered trademark were taxed at 5% under GST while unregistered which attract no tax. Previously in the VAT regime, all types of food were exempt from taxes.
“The concern of traders and consumers is that the new policy has created an unparalleled playing field with price changes. This has also led to a situation in which many suppliers are making a request to unsubscribe from their brands “The declared DP Nagendra Kumar, Chief of the Commissioner-in-Chief of the Central Board of Taxes and Customs (CBEC).
While some packaged food vendors have opted for cancellation of their trademark registration, many have preferred to change the brand and logo of the package so that the product can be sold at a cheaper price.
“About 75% of suppliers have changed the logo of the package, only 25% of them have asked to unsubscribe. This is because the government plans to tax those who are not registered, while unregistered Appreciate the non-tax benefit, “said Rameshchandra Lahoti, Bangalore’s chairman of Cereal Wholesale and Pulse Traders Association.
CBEC officials said the government has chosen to exempt unregistered food packaging only to protect small traders to compete with organized brands.
“However, the move has given rise to an unexpected scenario in which the price difference between similar products disrupts the balance,” said one official.
Lahoti said while an average price of turdal is Rs 100 per kg, a trademark costs more than Rs 5. Likewise, rice is sold at Rs 50 kg cost more than Rs if packaged in a bag with a trademark .
B T Manohar, chairman of the Commission on Taxation of Chambers of Commerce Federation of Industries and Karnataka (FKCCI), said he had received FKCCI representations from traders seeking a fiscal policy that would guarantee a level of play for all.
“Traders require that foodstuffs are exempt from GST,” said Manohar. “If they are stuck they put food in a special slab of gold jewelry lines.”