[ad_1]
The fitment committee is more likely to look into such objects the place there’s a minor change in composition however the tax slabs are completely different, creating confusion in tax legal responsibility, largely within the fast-moving shopper items (FMCG) sector, which not too long ago attracted many tax notices.
The checklist will likely be referred to the group of ministers on price rationalisation committee when the Items and Providers Tax (GST) Council meets subsequent, stated folks conscious of the matter.
“Classification challenge is an issue with some merchandise and the fitment committee is engaged on the element checklist the place there may be gray space and which has attracted most litigation,” a senior official advised ET on situation of anonymity.
There are 25-30 items and companies the place there may be overlapping of categorisation, the official stated.
ET BureauThe matter was additionally flagged by finance minister Nirmala Sitharaman, who in her assembly with enforcement officers of central and state items and companies tax requested the board to repair the classification associated points on a “precedence” foundation.
“The fitment committee is trying into the matter and when the council meets subsequent, the proposal will likely be referred to the group of ministers on price rationalisation,” the official stated.
Instant Set off
In November final yr, many FMCG corporations, which have been making chips and namkeens by “extruded” methodology have been requested to pay 18% GST, as a substitute of 12% and obtained tax notices to pay the pending quantity by March 31, 2024. Extrusion is a meals processing method used to create “puffed” or “expanded” snacks which can be able to eat. Extruded snacks are primarily produced from cereal flour or starches. Being excessive in energy and fats with low protein, they’re thought of unhealthy.
In August 2023, the Centre clarified that any snacks which were ready by extrusion course of ought to entice 18% tax and the Directorate Basic of GST Intelligence (DGGI) notices have been based mostly on this clarification.
Nonetheless, the FMCG trade stated there are objects equivalent to namkeen, fruit-based alcoholic and non-alcoholic drinks, flavoured milk and different processed meals objects the place there may be overlapping classification and which frequently entice completely different advance ruling in several states .
“Historically bhujia is taxed at 12% GST however now many of the producers are utilizing extrusion methodology to scale back fats content material. This creates a gray space and plenty of conventional bhujia makers now dealing with extra tax demand,” stated a namkeen producer, who didn’t want to be recognized. Within the absence of a definition, the trade requested for readability from the federal government, particularly after many corporations obtained DGGI notices.
Forward of the approaching deadline, the FMCG trade made an in depth illustration to the finance ministry and sought a decision in order to keep away from pointless litigation and notices.
