India’s largest milk cooperative Gujarat Cooperative Milk Marketing Federation (GCMMF) has not gone gaga over the Goods and Services Tax (GST) as it fears its products will face the maximum tax rate under the new regime, reports Business Standard.
While milk, curd (dahi) and buttermilk (chhas) continue to be exempted from tax coverage, some value-added products may end up incurring a higher tax rate-almost double under GST as against the current average tax rate.
“Today average tax on value-added products such as ghee (butter oil), butter and Tetra-packed milk ranges between 5 and 7 per cent. If these items start attracting GST at 12 per cent — indicated as the lowest slab under the new tax regime, then it would be a dampener on both consumers and producers,” said R.S Sodhi, Managing Director, GCMMF.
Sodhi would like the minimum slab under GST to be 6 per cent so that goods and commodities like ghee, butter, etc do not attract almost double the current average tax.
The overall market size of the products — butter, tetrapack milk and butter oil is estimated to be around 25,000 crore, Sodhi said.
“The ultimate impact will be on the farmers. As with higher tax and costlier products it would ultimately discourage the producer,” Sodhi warned.
incidence of GST will be on the consumers and not on the farmers. Higher GST on Value added to Dairy Products may discourage consumption of such products but that is a function of consumption economics alone. It looks like Amul’s view is a bit hasty one.