Guwahati: Pulses and cereals such as rice, wheat, and flour (aata), for example, which formerly incurred 5% GST when branded and packed in unit containers, would now incur GST even when "prepackaged and marked" as of today.

Furthermore, when "prepackaged and labelled," additional commodities such as curd, lassi, puffed rice, and so on will be subject to 5% GST from today. Essentially, there is a shift in the GST imposition mechanisms from branded specified items to "pre-packaged and labelled" specified goods.

As recommended by the GST Council at its 47th meeting, the revised GST rates went into effect today, July 18, 2022.

Noting several seek for clarification from stakeholders, the Union Ministry of Finance has clarified that "the expression ‘pre- packaged and labelled’ means a ‘pre-packaged commodity’ as defined in clause (l) of section 2 of the Legal Metrology Act, 2009, where the package in which the commodity is pre-packed, or a label securely affixed thereto is required to bear the declarations under the provisions of the Legal Metrology Act and the Rules made thereunder."

The term "pre-packaged commodity" refers to a commodity that is placed in a package of any kind, whether sealed or not, without the purchaser's presence, so that the product contained therein has a pre-determined quantity, and is required to bear the declarations required by the Legal Metrology Act, 2009. (1 of 2010).

However, for commodities like pulses, cereals, flour, and so on, GST will apply under rule 3 (a) of Chapter-II of the Legal Metrology (Packaged Commodities) Rules, 2011, when the pre-packaged commodity is provided in packages comprising a quantity of less than or equal to 25 kilogrammes.

"As a result, it is clear that a single package of these products [cereals, pulses, flour, etc.] holding more than 25 Kg/25 litre would not fall within the category of a pre-packaged and labelled commodity for the purposes of GST and would hence not collect GST," the ministry wrote.

Furthermore, suppose numerous packages intended for retail sale to the final customer, say ten packages weighing ten kilogrammes each, are offered in a bigger pack. In that case, GST will be levied on such delivery. However, for the purposes of the GST duty, a packet of say rice holding 50 Kg (in one individual package) would not be deemed a pre-packaged, aged, and labelled item.

GST would apply whenever such items are supplied by any person, such as a producer distributing to a distributor, a distributor/dealer supplying to a retailer, or a store providing to an individual customer. In addition, the manufacturer/wholesaler/retailer would be entitled to input tax credits on the GST levied by his supplier under GST's Input Tax Credit rules.

The supply of packaged commodities for consumption by industrial consumers or institutional consumers is excluded from the purview of the Legal Metrology Act by virtue of rule 3 (c) of Chapter II of Legal Metrology (Packaged Commodities) Rules, 2011. Therefore, if supplied in such a manner as to attract exclusion provided under the said rule 3(c), it will not be considered pre-packaged and labelled for the purposes of GST levy.

Also, if a rice miller who sells packages containing 20 kg rice, but does not make the required declaration under the legal metrology Act and the Rules made thereunder (although the said Act and the rules require him/her to make a declaration), he/she would be required to pay GST on supply of such package(s).