Food grains in bags with just shop’s name to attract 5% GST

Nagpur: The 1kg packet of pulses or flour kept packed at your neighbourhood shop may attract GST if the store’s name or any other indicative symbol is printed on the pack. The 5% GST, which is effective on a range of food items from Monday, covers anything that is pre-packed and labelled.
The new GST provisions taking effect from Monday say that items in packages bearing any label are subject to a 5% tax. A FAQ has been released by the Central Board of Indirect Taxes and Customs (CBIC).
The answer to the first scenario in the FAQ says, ‘earlier GST was applied on specified goods when put in a container bearing a registered brand name, on which an actionable claim is available. Now GST has been made applicable on such pre-packaged and labelled commodities which attract provisions of Legal Metrology Act’.
In other words, merely writing the name of a store can be treated as a label, bringing it within the 5% GST. The name need not be registered as a brand. These days many stores keep pre-packed bags for the convenience of customers and easy management. A number of stores have been printing their names on such bags merely for publicity. These are not registered brands but just labels. However, the new provisions bring even these pre-packaged products with labels into the tax ambit, explained an official.
Apart from food grains or related items, even curd or lassi packed in a similar fashion would attract GST, said a source, explaining the FAQ document.
However, stores that have turnover below Rs20 lakh an year, which is the threshold level of GST, will not attract the tax. There are a number of stores which already come under the ambit of GST, said the source..
Sources said even as storekeepers may start adding the tax, it would also be a challenge for the department to ensure compliance by the latter. The tax needs to be deposited with the exchequer also.
The tax covers packages covered under the Legal Metrology Act. This means items upto 25kg or litres in a package or container will attract GST.
However, if the retailer sells loose material from a 25kg labelled package it would not attract GST, says the FAQ document. In other words, 1kg pulses taken out from a labelled sack of 25 kg and packed in a plain bag by a retailer will not attract tax. Though the manufacturer and wholesaler would have to pay tax on it.