Rice mills look forward to the removal of GST on branded rice

Execution of the Goods and Services Tax (GST) since 1st July 2017 hasn’t gone that well and smooth at least with the rice millers in the southern states. Gummadi Venkateshwara Rao, the current chairman of All India Rice Millers Federation, had to say that earlier in pre-GST era, while few states had some tax on rice such as 5% whereas the others had no tax at all.

Under the GST, there is no tax levied on the rice, and therefore the prices have come down in many states. However, the branded rice which is only about 2 to 3% of the market share attracts as much as 5% GST now. He said that there were talks to bring the branded rice as well under the 0% GST.

Similarly, rice bran, the oil extracted from the rice and sold for solvent purposes also attracts as much as 5% GST, though there is no tax levied on the bran meat that is fed to the cattle and poultry. Mr. Rao was of the opinion that GST on bran should be removed.

K.S. Jagadeesan, the former president of Tamil Nadu Federation of rice mill owners and Paddy rice dealers association, said that the southern states were the major rice consumers and the awareness of various rice brands has been very high in states such as Tamil Nadu. The state has as many as over 100 brands. He was of the opinion that it was the government in the past who had asked the rice millers to modernize the mills and hence develop various brands. Now when there are so many brands, the branded rice have started attracting as much as 5% GST. This has eventually increased the cost of the rice.

D. Thulasingham, the president of the Tamil Nadu federation, said that pot the implementation of the GST, many millers in the state have stopped using the brands. The state government is expected to raise and appeal this to the central government to remove the GST on the branded rice. Mr. Thulasingham said that the government should at least make sure that it removes GST on all the non-basmati rice.

Similarly, the GST implied on the bran should also be removed because when a rice mill owner supplies the bran to a trader, he would not know what exactly the bran would be used for. He also demanded a clarification on the Job work, which currently attracts 18% but is not applicable for the rice sector.