At last count, with over 2,000 tweets, the hashtag #LuxuryTaxOnBiscuits was trending on Twitter. While some tweets were backed by comparison of goods and services tax rate of 18 percent on biscuits versus 5 percent on noodles, others were just a friendly take on why a tax cut on biscuits is unlikely.
The conversation assumes importance in the context of the Goods and Services Tax Council meeting this Friday. The industry has requested that biscuits priced at Rs 100 per kilogram should be taxed at 5 percent and those above this threshold should continue to be taxed at 18 percent.
The above review will be a big enabler for augmenting supplies of mass-market biscuits like Glucose, Marie and Milk Biscuits, that necessarily have a sale of up to Rs 100 per kg and are purchased and consumed by the low-income group.Biscuit Manufacturers Welfare Association, Letter To FM
Prior to GST, biscuits priced below Rs 100 per kg didn’t attract excise duty. But the new indirect tax clubbed this category with premium biscuits. The association has pointed out that bakery items like rusk, which are retailed at around Rs 150 per kg and were also exempted from excise, attract a 5 percent GST. Biscuits below Rs 100 are far more popular than rusk and serve the poorest of the poor.
The biscuit segment in India is d at Rs 37,000 crore and amounts to a volume of 32 lakh tonnes per annum, the association said in its letter. Low price-high nutrition biscuit varieties including glucose, marie and milk, which are sold at below Rs 100 per kg comprise around a quarter of total biscuit sales, it said.
But the GST fitment committee is against reducing tax on biscuits priced at Rs 100 per kg or below from the current 18 percent to 5 percent, senior government officials told BloombergQuint.
The industry may have to contend with Twitter love for now.
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