Sweets and namkeen makers ask for GST reduction to 5% citing jobs, margins

Federation of Sweets & Namkeen Manufacturers have asked for a reduction in GST on namkeen from 12 per cent to 5 per cent, and also asked the government to allow sweet shops selling chaat and other food items to be taxed at 5 per cent with input tax credit (ITC). 

In its note, the federation said that these changes would reduce litigation, stabilise margins, boost employment and align with India’s ambition of becoming a global food hub, pointing out that food items are scattered across all the current GST slabs.

 

“Malabari Paratha is taxed at 18 per cent, while roti/chapati remains at 5 per cent and bread at zero. Non-branded namkeen attracts 5 per cent GST, while branded namkeen is taxed at 12 per cent. Rasgulla or jalebi consumed at a sweet shop is at 5 per cent without ITC, and takeaway is also at 5 per cent with ITC. The same applies to other mithai,” Firoz H Naqvi, director general at the Federation of Sweets and Namkeen Manufacturers said in its note.

 

“Such widespread inconsistencies across different product categories have triggered classification disputes, increased compliance burdens, and frequent litigation, hurting small and medium businesses the most in the Indian food processing industry,” he added.

 

The plea also added that restaurant services attract 5 per cent GST without ITC and showroom sales fall under 5 per cent, 12 per cent and 18 per cent with ITC. 

 

“Since both operations share the same infrastructure—kitchen, staff, utilities, and rent—it is almost impossible to allocate input expenses separately. As a result, businesses are forced to maintain dual records, which raises operational costs and exposes them to litigation risks,” Naqvi said.

 

He added that this hybrid model, which represents the future of food retailing, has, therefore, become compliance-heavy and litigation-prone, discouraging expansion.

 

The note added that the industry is grappling with rising prices of edible oils and pulses. Transport costs have increased by 67 per cent since the rollout of GST and geopolitical factors have caused packaging and logistics costs to surge significantly in recent years.