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'Don't increase GST': Food sellers write to Sitharaman amid tax hike speculations

The letter by food companies states that the industry has been struggling to maintain its operations due to severe financial constraints and an increase in GST rates will aggravate the sector's troubles

twitter-logo BusinessToday.In   New Delhi     Last Updated: December 16, 2019  | 16:53 IST
'Don't increase GST': Food sellers write to Sitharaman amid tax hike speculations
The GST Council, in its next meeting under FM Nirmala Sitharaman, is expected to take some drastic measures to shore up revenue shortfall

Processed food companies have requested Finance Minister Nirmala Sitharaman to rethink a rumoured hike in GST rates. The All India Food Processors' Association (AIFPA) has written to the Finance Minister to convey the anxiety among food industry over the proposed price hike on food prices.

The AIFPA, which has ITC, Nestle, PepsiCo, Bikanervala, Haldiram, as well as various small and mid-sized food processing companies, has written to the Finance Minister days before the upcoming GST Council meeting on December 18, The Economic Times reported. The all-powerful panel of finance ministers is expected to discuss ways to increase GST mop-up by improving compliance and revising rate structure.

The letter signed by AIFPA president Subodh Jindal states that the food industry has been struggling to maintain its operations due to severe financial constraints and an increase in GST rates will aggravate the sector's troubles, the report said. This will be to the disadvantage of farmers, industry and the government, the report quoted the letter as saying.

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"Industry has been constantly requesting you to shift food products currently taxed at 12 per cent to 5 per cent. The government has not so far agreed to this request and now, on the contrary, the industry is faced with the unjust proposal of increasing the GST rates," the letter read.

Reports suggest that the GST Council may implement some major changes in the tax regime in its next meeting on December 18 to shore up a shortfall in collections and pending compensation to many states. The council may hike tax rates on certain essential commodities or even revise the current 5 per cent tax slab to 6-8 per cent.

Currently, all products and services are taxed under four slabs under the GST regime - 5, 12, 18 and 28 per cent. Restructuring the slab rates might aid the government to garner additional revenues of Rs 1,000 crore per month. The GST Council meeting is also likely to deliberate on raising cess on some products to meet the growing need for compensation, among other issues.

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Meanwhile, during a press conference last Friday, FM Sitharaman said that she had not discussed GST rate hike with her team. "The buzz is everywhere except in my office. I have had no conversations on the GST Council meeting with my team yet," she had said.

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