GST rate: Snack Food Association wants tax on traditional namkeen items to be cut to 5%

Mumbai: The Snack Food Association of Maharashtra (SFAM) today urged the government to cut GST rate to 5 percent from the 12 percent announced by the GST Council.

"The GST Council has announced 12 percent GST rate for Indian traditional namkeen, savories, farsan, potato chips, banana chips etc. This rate should be reduced to 5 percent to maintain uniformity with GST rate for sweet meats & mithai," SFAM president Ajit Mota said in a statement here.

 GST rate: Snack Food Association wants tax on traditional namkeen items to be cut to 5%

Representational image. Getty

The GST rate for namkeen is 12 percent 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 percent GST, the effective prices of all the products would increase by at least 6 to 8 percent, Mota said.

Mota said pan-India industry size for namkeens is large with 8 to 10 percent growth rate per annum.

Nearly 95 percent 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 percent 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 percent GST rate. Thus clarification of GST on hot snacks is still awaited from authorities, he said.

Updated Date: Jun 21, 2017 11:55:25 IST