Curd, Paneer turn costlier by 5%, issues for retailers & manufacturers remain

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BY VENKATACHARI JAGANNATHAN

Chennai– With curd, paneer, unbranded pre-packaged food items like wheat flour and others coming under the Goods and Services Tax (GST) net from Monday onwards, retailers and manufacturers are discussing how to account for the old stock.

“The GST falls at the time of sale. The problem now will be with the old stock sporting the Maximum Retail Price (MRP). A retailer cannot sell at a price that is more than MRP nor he can alter the retail price by pasting a sticker,” L.S. Karthikeyan, GST Consultant in Bengaluru told IANS.

He also said the retailers selling the old stock will not get the input tax credit.

“It is precisely the topic that is being discussed internally,” a senior official of a company that sells provisions and dairy products told IANS.

“In the case of dairy products, the issue will be resolved in two days as they move fast and perishable. But the problem is with other un-branded pre-packed items,” the official added.

According to Karthikeyan, any packaged product that identifies the manufacturer is a brand. So, in-store brands also come under the GST ambit.

Meanwhile, companies are in the process of hiking their prices of paneer, curd and other items.

“The margins are thin in the dairy products and provisions. So the tax element has to be passed on,” Karthik Jayaraman, President and Co-Founder, WayCool Foods and Products told IANS.

The Rs 1,008 crore turnover WayCool Foods is a farm gate to dining plate agri commerce company.

The company is largely a business-to-business (B2B) food products supplier (sourcing from farmers/farmer producer organisations directly and supplying to retail outlets/bulk buyers) in the southern markets and in Maharashtra.

The company has four brands — Kitchenji (dals, staples and spices), Madhuram (bulk grain and pulse), Freshey’s (ready-to-cook items, dairy products) and L’Exotique (premium fresh fruits).

It is said some companies are looking at retaining the retail price level while reducing the sale quantity.

“It is difficult in the case of several products as the packaging line has to be changed. For instance, paneer is packed in tubs. Reducing the quantity to hold the price line may not work out,” Jayaraman added.

While the GST is applicable for pre-packaged items weighing less than 25 kg/25 litre, companies are looking at increasing the quantity per pack to be outside the tax net.

The GST applies when such goods are sold in prepackaged and labelled packs.

Therefore, GST would apply when prepackaged and labelled packages are sold by a distributor/ manufacturer to such retailers.

If a retailer supplies the item in loose quantity from such a package, it will not attract GST.

The GST Council at its recent meeting held in Chandigarh decided to bring pre-packaged and labelled food items such as wheat flour, paneer, puffed rice and other items under the GST net in order to avoid disputes. (IANS)

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