The government has revoked the FSSAI’s exemption from paying service tax and announced that the food authority’s services would now be subject to the Goods and Services Tax (GST). Services like the issuance of Central licences will henceforth be subject to an 18% service tax.
As a result, the FSSAI has published a notification addressing the implementation of GST on services offered by the food authority, such as Central License issuance, Food Safety Mitra Fees, Product Approval Fees, Import Clearance Fees, and so forth.
The notification states that starting on July 18, 2022, it was announced that the GST at the stipulated rate will be imposed on all services supplied by the FSSAI. It further mentions that the tariffs for different services would be amended per this change.
Services such as licencing, registration, analysis, or testing of food samples provided to food business operators by the Food Safety and Standards Authority of India (FSSAI) were tax-free under the serial number 47A of the Central tax rates of the GST Act, which was released in 2017.
These services will now be subject to an 18% service tax.
Industry insiders claim that eventually, only customers will be responsible for this expenditure, which would increase the retail price. The customer will ultimately spend more on groceries, whether flour, almonds, or foreign fruits. The newly added application of GST, including that on the services given by the FSSAI, is predicted to have a direct influence on food price inflation, according to Amit Lohani, who is the convener of the FIFI, also known as the Forum of Indian Food Importers. Businesses will ultimately be obliged to pass the damage to customers through higher pricing since they can only withstand so much financial pressure on their balance sheet.
A complex network of interconnected enterprises with symbiotic ties is affected negatively by an increase in tax burden like that in this particular situation, the speaker continued. The general trade outlook can be improved by rolling back the subject implementation; otherwise, its effects would eventually trickle down to the base of the employment or consumption pyramid. We sincerely ask that the present government reverse the implementation in question due to urgent problems such as rising inflation, the need for lessened compliance, fewer administrative expenses, and our dedication to business-friendly policies.
The tax burden is now widening and engulfing all exempted or put out of the purview of GST to date. And this will increase the tax burden on all the common men of the country. Along with that, it is also going to increase the price burden for even the basic requirements of mankind, which is food.
It will not leave the small shopkeepers and grocery store owners who provide the customers with the products on credit, making it easy and possible for them to live on meagre earnings, which are a commonly seen element in the small districts across various states in the country.
