All states and union territories were in favor of a decision to raise goods and services tax rates on certain pre-packaged and labeled staple food products at the last GST Council meeting, the finance minister said.
“I take extreme pride to say that Council has applied its mind at various levels,” Nirmala Sitharaman said on August 2 in response to a discussion on price rise in the upper house of parliament. “The exemption for the poor continues, the misuse for the registered brands had to be corrected.”
The GST Council had met in Chandigarh in late June. At the end of the meeting, the council had decided to impose GST on food items, grains that are prepackaged, and pre-labeled retail packs, including pre-packed, pre-labeled curd, lassi, and buttermilk.
This decision was taken based on the approval of recommendations made by a group of ministers on rate rationalization.
The opposition parties have stalled proceedings in the parliament over the last couple of weeks asking for a discussion on the price rise. During the discussion in both houses of the parliament over the last two days, the finance minister, who is the chair of the GST Council, reiterated that the GST Council decisions were unanimous.
Pre-GST, nearly all states had taxes on food items, Sitharaman said today. Loose foodgrains continue to remain outside the tax net, she added.
Sushil Kumar Modi, who is a member of the ruling BJP, as well as one of the erstwhile key members of the GST Council, said today that opposition states should have called for a vote on the issue of tax on food items, in case they did not want such a tax to be imposed. The states could also choose to refund the tax to dealers if they still want to provide relief.
The state of Kerala has said it will not implement GST on food items. States are emboldened by a recent apex court ruling that recommendations of the GST Council are not binding.
Several states have also demanded that the GST compensation to them, which was due for five years ending June 2022, should be extended.Finance Minister Sitharaman said today that states have seen an average resource growth of 14.8 percent since introduction of GST against 9 percent growth in pre-GST period.