Snack Food Association demands five Percent GST rate instead of 12 Percent on namkeen-farsans

The Goods and Services Tax (GST) Council had announced 12 percent tax rate for Indian traditional Namkeen, Savories, Farsan, Potato Chips, Banana Chips and so on. This rate should be reduced to 5 percent to maintain uniformity with the GST rate for sweet meats and Mithai, stated Ajit Mota, President - Snack Food Association of Maharashtra.

The GST rate for Namkeen is 12 percent (double from the present tax) but industry hardly receives any input credit as its raw materials are agro based. There is no tax on raw materials like potato, banana, maida, besan, salt and pulses. There is only a marginal tax on masala. Namkeens and sweets are sold from the same shop and are interrelated products from the point of view for common men consumption. With 12 percent GST, the effective prices of all the products would increase by at least 6 to 8 percent.

Sweets, namkeens, potato wafers, banana chips and other products made from similar ingredients are sold from same shops. So it would be quite difficult for shop owners to maintain exact bifurcation of sales. Thus it leaves a big avenue for tax officials for manipulations and corruptions.

Ajit further stated that Pan India Industry size for Namkeens is large, with 8 to 10 percent growth rate per annum. 95 percent of the industry has been located in the unorganised sector. Mainly this industry consists of home units, cottage units and small scale units. These units operate at a very thin margin. Thus, the industry could not sustain 12 percent GST rate, resulting in closing down of units, which would lead to large scale unemployment.

Pradeep S. Jain, Secretary: Shree Mumbai Mishtan Vyavasai Sahakari Mandal Ltd. urged the authorities to reduce the GST rate for Namkeen, potato wafer and banana chips to 5 percent from the proposed 12 percent. He has asked the authorities to merge it with the rate of sweet meats and mithai, at 5 percent.

K.L. Daga, Committee Member of the Snack Food Association of Maharashtra informed that there is no clarity of GST rate on hot snacks like Dhokla, Jalebi, Samosa, Kachori and so on. If the hot snacks are consumed in AC Restaurants, it would attract 18 percent GST rate. It is 5 percent on Vada-Pav. Thus proper clarification of GST on Hot Snacks is still awaited from authorities.