Snack Food Association demands 5% GST rate on food products

The Snack Food Association of Maharashtra (SFAM) today urged the government to cut GST rate to 5 per cent from the 12 per cent announced by the GST Council.
"The GST Council has announced 12 per cent GST rate for Indian traditional namkeen, savories, farsan, potato chips, banana chips etc. This rate should be reduced to 5 per cent to maintain uniformity with GST rate for sweet meats & mithai," SFAM president Ajit Mota said in a statement here.
The GST rate for namkeen is 12 per cent which is double than the present tax, but industry hardly receives any input credit as its raw materials are agro based, he said.

There is no tax on raw materials like potato, banana, maida, besan, salt, pulses etc. There is only a marginal tax on masala. Namkeens and sweets are sold from the same shop and are inter related products from the point of view for common men consumption. With 12 per cent GST, the effective prices of all the products would increase by at least 6 to 8 per cent, Mota said.
Mota said pan-India industry size for namkeens is large with 8 to 10 per cent growth rate per annum.
Nearly 95 per cent of industry has been located in unorganised sector. This industry mainly consists of home, cottage and small scale units and these operate at a very thin margin. Thus, the industry could not sustain 12 per cent GST rate, resulting in closing down of units, which would lead to large scale unemployment, he said.

K L Daga, a member of the association, said there is no clarity of GST rate on hot snacks like dhokla, jalebi, samosa, kachori etc.
If the hot snacks are consumed in AC restaurants, they would attract 18 per cent GST rate. Thus clarification of GST on hot snacks is still awaited from authorities, he said.