The Centre is likely to propose two rates for biscuits, depending on prices, at the goods and services tax (GST) Council meeting on Saturday. It would also make a case to tax gold at 5 percent.
For biscuits priced at Rs 100 a kg or more, the Centre might propose a GST rate of 18 per cent. Those priced less could be slotted in the 12 per cent slab.
At present, biscuits in the second category are not taxed by the Centre, but have a 4.5-14.5 percent value-added tax, depending on the state.
Biscuit makers are opposing higher taxes. Parle-G, which produces popular glucose biscuits, wants it to be in the lowest tax slab — 5 per cent. They argue it is consumed by the poor and distributed at Anganwadi centres.
On Saturday, the Council, chaired by Union Finance Minister (FM) Arun Jaitley and comprising FMs of states or their representatives, will decide on the rates for seven goods — biscuits, gold, textiles, handicrafts, footwear, bidis and agricultural implements. The final call on the fitment of rates might be a political one, but some petitioners to the Council are already giving it a political tinge.
For instance, Hindustan Unilever (HUL), the maker of Surf Excel, Rin, Vim and Wheel, has pitched for a lower GST rate, citing Prime Minister Narendra Modi’s Swachh Bharat campaign.
HUL has argued that a 28 percent tax on detergents — used to clean toilets — was against Swachh Bharat.
At its previous meeting in Srinagar earlier this month, the GST Council cleared rates for 1,211 goods and 500 services.
On the demand for a low GST rate for biscuits, an official said the Council would look at the current tax incidence before deciding on it. Experts claim there should be a third category — of biscuits priced at Rs 500 per kg. These should be taxed at 28 percent, said M S Mani, senior director, Deloitte.
“Low-price-high-nutrition biscuits should be taxed at five per cent, those priced between Rs 100 a kg and Rs 500 a kg at 12 or 18 percent, and those priced higher at 28 per cent,” he said.
Mani added, “On a flight, three biscuits are sold for Rs 150. If a person can afford that, they should pay a higher tax.”