GST at 5% on food grains if “ pre-packaged and labelled”

Bengaluru:  In the backdrop of the 47th GST Council meeting held on 28th and 29th June 2022, it has been notified vide GST Rate notification 6/2022 to levy GST on “prepackaged and labelled “food-grains at 5%.

The items mainly include cereals, meslin, wheat, rye, barley, sorghum, oats, maize, rice, buckwheat, millet, jowar, bajra, ragi, pulses, and the flours related therein. Earlier food-grains were taxed only if “put up in unit container and bearing a registered brand name”.

Some of the branded companies surrendered the brands to escape levy of GST. This led to substantial  revenue loss and GST council thus decided to tackle this kind of tax evasion by levying tax on “Pre-packaged and labelled items instead of branded item.

GST council decided to levy 5% GST on such food grains which fulfil the conditions, They are pre-packaged, They are labeled, They are retail packages of quantity 25kgs or lesser.
CBIC has further clarified in the FAQs dated 17.07.2022 on GST applicability on ‘pre-packaged and labelled’ goods- reg. the taxability on these items with practical examples.

In view of the above, Food grains sold in loose quantity continue to remain exempted, A single package of cereals, pulses and flour containing quantity of more than 25 kg/25 litrewould not fall in the category of pre-packaged and labelled commodity for the purposes of GST and would therefore not attract GST, No GST is levied on food grains supplied for institutional and Industrial use.