GST rate on pre-packaged, pre-labelled dairy & agri products notified

Loose sale continue to be exempted; room rent of ₹5,000 plus in hospital to attract GST

Get ready to pay more not just for pre-packaged and labelled curd, lassi, flour, rice etc but also for cutleries. The Finance Ministry has notified GST rates for various goods sold as pre-packaged and pre-labelled beside others.

Tax officials have clarified that dairy and agri products sold loose or packed in front of the customers will continue to be exempted.

Notifications are based on recommendations given by GST Council in its meeting last month at Chandigarh. The council agreed to end exemption on various agri and dairy products as suggested by a Group of Ministers (GoM). Hitherto, GST was exempted on specified food items, grains etc when not branded, or right on the brand has been foregone.

The Council recommended to revise the scope of exemption to exclude from it pre-packaged and pre-labelled retail pack in terms of Legal Metrology Act, With this, the difference between branded and unbranded goods for many of dairy and agri products have been removed. Now, both will attract same rates provided unbranded ones are pre-packaged and pre-labelled.

What the notification says

According to the notification, the “expression ‘pre-packaged and labelled’ means a ‘pre-packaged commodity’ as defined in clause (l) of section 2 of the Legal Metrology Act, 2009 where, the package in which the commodity is pre-packed or a label securely affixed thereto is required to bear the declarations under the provisions of the act.”

Under the Legal Metrology Act “pre-packaged commodity” means a commodity which without the purchaser being present is placed in a package of whatever nature, whether sealed or not, so that the product contained therein has a pre-determined quantity.

However, experts call for a clarification. Aditya Singhania, Founder at Singhania’s GST Consultancy & Co, says Rules of Legal Metrology Act require declaration about to be given for both retail (below 25 kg weight) and wholesale (above 25 kg weight).  Since, the press release mentioned about retail sales only, so, the issue is will declaration on packages of above 25kgs also required? “In my view yes, as per definition,” Singhania said while adding that government need to clarify.

Hospital room

Another notification prescribes the mechanism to end exemption on non-ICU room in a hospital. Here, it has been said:  GST to be levied at the rate of 5 per cent on “services provided by a clinical establishment by way of providing room [other than Intensive Care Unit/Critical Care Unit/Intensive Cardiac Care Unit/Neo natal ICU ] having room charges exceeding ₹5,000 per day to a person receiving health care services.” There was hectic lobbying to put the levy in abeyance or even withdraw.