Tamil Nadu wants all food items to be nil-rated in GST regime

Tamil Nadu on Saturday demanded that all food items whether branded or not should be nil rated in the new GST regime to be rolled out next month and that some of the rates need to be revisited in the interest of the common man.

Addressing the GST Council meeting, state Finance Minister Jayakumar said cereals like rice, wheat and barley have been exempted as per the unanimous decision of the Council. However, the same items sold in unit containers and bearing a registered brand name have been brought under the five per cent category.

"We would reiterate that all food items whether branded or not should be Nil rated. Aata, maida, besan and other flours may also be treated similarly. Water sold in Refill Cans (bubble top) and small plastic pouches should be distinguished from water sold in bottles as the former are consumed by the lower strata of society as an essential commodity," he said strongly urging that the first two categories may be exempted or taxed at a lower rate of five per cent.

he said Palmyra Jaggery (Gur) known as "Karupatti" and Palmyra Sugar known as "Pana Kalkandu" are traditional cottage industries and are also organic products. They are a source of income for the rural people who are engaged in these cottage industries. As they are not specifically mentioned in the Schedule, they are likely to be charged at 18 per cent.

"We request that Karupatti may be mentioned in the Schedule along with Cane Jaggery in Chapter 17, item 1. (d) Curry and other spices are mentioned in Chapter 9, item 10 as taxable at the rate of 5%. This is commonly known as Masala powder.

"We request that the entry may be expanded as follows: "…curry and other spices, masalas using mixture of spices of all forms and in all varieties". This will prevent misinterpretation as condiments are separately listed in Chapter 21 and are subjected to tax at 28 per cent," Jayakumar said.

He pointed out that the Supreme Court has ruled that spice mixes are distinct from condiments. Unbranded sugar confectionery is a cottage industry and the primary input is sugar which is taxable at five per cent.

He said unbranded sugar confectioneries may also be taxed at five per cent instead of 18 per cent.

Himself hailing from the fishermen community, Jayakumar said in the coastal areas, as a supplement to fishing activities, fisherfolks are involved in collection of seashells for making of articles and handicraft items. Hence, seashells and articles and handicraft items made out of them may be NIL rated.

He said pickle is an essential part of Indian cuisine and its main ingredients are vegetables and other edible parts of plants which are exempted. Hence pickles may also be taxed at a lower rate of 5% instead of 18% like other ingredients like masala, oil, etc. which are are taxed at five per cent.

The minister said wet grinder manufactured in Coimbatore is a GI-tagged product which is produced 98 per cent in small, medium and micro enterprises sector and is not taxed under central excise. Rate on this product should be taxed at 18 per cent instead of at the proposed 28 per cent, he said.

Jayakumar also said distinction has to be made between AC restaurants serving liquor and those not serving liquor and the second category should be taxed at 18 per cent.

As regards the rate of tax on gold jewellery, he said he would like to suggest that a distinction should be made between hand-made jewellery and machine-made jewellery. As hand-made jewellery is made by goldsmiths from the economically weaker sections, it should be exempted or taxed at a nominal rate.

He also said Tamil Nadu has been exempting films made in the local language from the purview of Entertainment Tax. The levy of tax at 28 per cent on all films will adversely impact the film industry in the State. "Hence, we urge that films made in the local language of the State should be subject to a lower rate of tax."