Government has withdrawn the exemption given to the FSSAI on service tax and has issued notification to bring services offered by the food authority under Goods and Services Tax (GST). Now services like issuing of Central licence will attract 18% service tax.
Consequently, the FSSAI has issued a notice regarding application of GST on services provided by the food authority including services such as issue of Central licence, product approval fee, food safety mitra fee, import clearance fee and so on.
“It is brought to the notice of all the stakeholders that GST at the prescribed rate would be applicable on all services provided by the FSSAI commencing 18th July, 2022,” reads the notice adding that the rates for various services would be revised accordingly.
Under the serial number 47A of the Central tax rates of the GST Act issued in 2017, services by way of licensing, registration and analysis or testing of food samples supplied by the Food Safety and Standards Authority of India (FSSAI) to Food Business Operators attracted nil tax.
Now these services will attract 18% service tax.
According to industry insiders this cost eventually will be borne by consumers only and will add up to the retail cost. The consumer will end up spending more on household items be it flour, almonds or imported fruits.
Amit Lohani, convener, Forum of Indian Food Importers (FIFI), said, “The decision of recently added imposition of GST, including that on the services offered by FSSAI, is anticipated to have a direct impact on food price inflation. As businesses can only absorb so much of the financial burdens on their balance sheet and eventually they will be forced to translate the impact on the consumers as the prices will increase.”
He added, “Increased tax burden like that in this specific case creates an economic ripple effect downstream, in a complex web of businesses that have symbiotic relationships. A rollback of the subject implementation can help the overall trade outlook see a positive light otherwise the effect of execution will finally reach down to the bottom of the employment or consumption pyramid. We humbly would like to submit it to the current administration to revoke the said implementation attributing to the burning issues like high inflation topped with a need for reduced compliance, lower administrative costs, and our commitment towards ease of doing business.”
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