New sales tax regime due to enter force in India on 1 July

New sales tax regime due to enter force in India on 1 July

India's processed food industry has welcomed the government's decision to reduce the newly announced goods and services tax rates on several food products from 18% to 12%.

The GST Council, comprising India's central and state governments, agreed to revise the new tax rates that had been put in place for a range of foods – pickles, chutney, sauces, instant food, curry paste, mayonnaise, salad dressings, mixed condiments and mixed seasonings – to 12%.

An initial move to place these commonly used products in the 18% tax bracket came as a surprise as the food industry was demanding them to be taxed in the lowest 5% bracket, even while most other food products are at 12%, Piruz Khambatta, chairman at the Confederation of Indian Industry's national committee on food processing, told just-food.

The new GST regime, devised to streamline what has been a patchwork of national, state and municipal charges taxes, is to be adopted on 1 July, and the food industry may still demand a lower tax rate at least for food products priced at around INR25, including chutneys and jams.