It imposes a tax of 5% on unbranded pre-packed foodgrains, pulses and cereals, as well as pre-packed labelled curd, butter milk and lassi, which were outside the ambit of GST so far. These are items of mass consumption
sold at local kirana stores.
Trade associations called a day’s strike on Saturday. Sharad Maru, president of the Grain, Rice and Oilseed Merchants’ Association said, “We will protest the decision nationwide. We have submitted a memorandum to the GST commissioner raising several questions.”
Prices of grain and pulses may rise by 8-10% and not just 5%. One trader said, “Small shopkeepers will have to bear compliance costs of hiring experts to file returns, and pay service charges once they obtain a GST number. They will lose out to retail chains.”
Dairy producers will pass the burden to the consumer. R S Sodhi, managing director of Gujarat Cooperative Milk Marketing Federation, which owns Amul, informed TOI that they will increase rates by 5% from July 18 itself.
“There is no other alternative. We cannot absorb this extra cost. But I do feel that curd, butter milk and lassi are consumed by the common man. These are not luxury items. Moreover, these are delivered fresh twice every day to local retailers, so the burden of compliance like e-way billing will increase. The margin of profit is low even though volumes are high. Small vendors will now have to hire experts to file monthly GST returns, and they may wonder if it’s worth the trouble and the expense,” Sodhi pointed out.
Manish Bandlish, MD, Mother Dairy Fruit & Vegetable, said, “It is likely that the impact may be passed on to consumers.”
Gowardhan Dairy, which is a private brand and not a cooperative, already pays 5% GST and welcomed the tax on rivals. “Now all players will share the same platform, fostering healthy competition,” said Devendra Shah, chairman, Parag Milk Foods.