5 percent GST on pre-packed and labelled food items will cause loss of business to SMBs: CAIT

Traders' body CAIT on Monday said the decision to levy 5 percent GST (goods and services tax) on pre-packed and labelled food items will cause loss of business to foodgrain traders, increase compliance burden and raise the prices of unbranded everyday essentials.

The Confederation of All India Traders (CAIT) said it will appeal to Union Finance Minister Nirmala Sitharaman and the GST Council to reconsider the decision.

Pre-packed and labelled food items such as meat, fish, curd, paneer and honey will now attract GST.

This comes after the GST Council last week accepted most of the recommendations of a group of ministers from states on withdrawing exemptions to rationalising the levy.

CAIT Secretary General Praveen Khandelwal said that to protest against this decision of the GST Council, the traders' delegation will meet state finance ministers and hand over a memorandum to them.

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He said there is a lot of anger and outrage among the foodgrain traders on the recommendation of the GST Council for bringing all types of pre-packed and pre-labelled foodgrains and other items under the GST tax slab of 5 percent, which will cause a huge loss of business to foodgrain traders across the country.

"This decision will empower big brands to capture the market at the cost of small manufacturers and traders. Special food items, cereals, etc, which were not branded till now, were exempted from GST.

"With this decision of the council, pre-packaged and pre-labelled retail packs, including pre-packaged, pre-labelled curd, lassi and buttermilk, will now attract GST tax and will cause huge damage to the business of foodgrain traders in more than 6,500 grain markets across the country," Khandelwal said.

Addressing a press conference here, CAIT's National President, BC Bhartia, said this decision will not only increase the burden of compliance and cost to the traders but on the other hand, the basic goods of necessity will also become expensive.

"According to this decision, now if a grocery shopkeeper also sells food items packed with any mark for identification of his item only, then he will have to pay GST on that food item. After this decision, agricultural products with pre-packaged labels like paneer, buttermilk, packaged curd, wheat flour, other cereals, honey, papad, food grains, meat and fish (except frozen), puffed rice and jaggery etc. will also become costlier," Bhartia said.