The Goods and Services Tax (GST), a blanket tax reform initiated by the government will be implemented on July 1st 2017.For certain sectors of the economy which sell products that lie on the fuzzy demarcation between low and medium margin products, the GST might not be good news. One such market is the biscuit manufacturing market which is right now fighting against the inclusion of low-priced glucose and other biscuits under GST which might lead to the shutting down of about 240 biscuit factories.
“A proposed flat 12 per cent GST on biscuits will be a grave injustice to the poor as biscuits retailed below Rs 100 per kg are treated as merit goods. If these products are included then about 240 biscuit factories will shut down,” says Mayank Shah, Vice President, Biscuit Manufacturers Welfare Association.Shah, who is also deputy marketing manager at Parle Products, said low-cost biscuits which at present account for 40 % of total sales due to its convenience may fall down to 20 % if they are taxed under GST.
The manufacturers are on protest to retain the central excise duty exemption that lower priced biscuits under Rs 100 per kilogram have been entitled to all this while. Biscuits in India are generally priced in the range of Rs 70 to Rs 700 per kilo gram.
“Despite 225 per cent surge in input costs, glucose biscuit price has not gone up significantly. Glucose biscuit was retailed at Rs 40 per kg in 1996. Today after 20 years, retail price is just Rs 70 per Kg. Biscuit manufactures make only 2-3 per cent profit on below Rs 100 per kg biscuits,” says Biscuit Manufacturers Welfare Association president Haresh Doshi reaffirming the need to maintain taxation of these low-price biscuits at an optimal level such that it benefits both manufacturers and consumers.