Biscuits should be put in the lowest slab under the upcoming Goods and Services Tax (GST) regime in a bid to encourage ease of doing business and liberal FDI policy, according to manufacturers.
"Keeping all biscuits at the lowest taxation slab of GST regime would be in line with other good policy initiatives undertaken by the government of the day such as ease of doing business and a liberal FDI policy to attract new investors in food processing sector in India," said the Federation of Biscuit Manufacturers of India (FBMI).
The federation, which is an affiliate of the PHD Chamber of Commerce and Industry, further contended that a higher GST rate, even for a segment of biscuits, would impact demand in the entire value chain.
"It would also result in cutting down on procurement of raw materials by biscuit manufacturers which would adversely impact farmers across India. Lower demand will also negatively impact investments, exports and employment in the food industry," the FBMI said.
The federation observed that with 93 per cent of the food basket comprising basic food, which is proposed to be exempt or taxed at lower GST rate, taxing the remaining 7 per cent that comprises processed food items at a higher GST rate will not be in the interest of fairness and simplicity, the basic goals of GST.
"It also holds that discrimination of food products, on the basis of their being branded or un-branded, premium or non-premium, will not only be against the principles of efficiency and equity, but will also lead to classification disputes and complex record-keeping and compliance system," it said.
In addition, the FBMI said the GST regime can reach its optimum efficiency in tax collection by expansion of tax base within biscuit industry at lower merit rate and not by taxing a section of the consumers at higher rates at the cost of others.
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