/ GST

Why B2C is Taxable but B2B is Exempted?

pre-packaged food

Why B2C is Taxable but B2B is Exempted? – A Clever Step by Govt on GST levy?

  • The pre-packaged and labelled food items (up to 25kg packing) were included in the scope of the GST, making some food items taxable when sold to B2C customers but remaining exempt when sold to B2B customers. ultimately increasing government income.
  • The govt of India came under heavy shelling on social media after the price of a number of retail commodities for daily consumption, including rice, wheat, flour, and milk-based products, increased on Monday,
  • The main reason for targeting consumer purchased goods is that there is no ITC burden on the government and all proceeds flow to the exchequer, according to Swatantra Kumar Singh (A Delhi based GST expert). B2B transactions do not incurred  any Gain since dealers take that input taxes have already been paid.
  • They also said that “The govt of India simply has made this another source of income. With the GST compensation they were receiving to make up for a shortfall in collections ending on July 1 2022, the tax is meant to assist states in collecting some money”
  • GST Taxation specialised also given the criticism point of view of copious references the govt has made to the Legal Metrology laws to explain the levy of GST,
  • According to a GST expert, a comprehensive law like the one on the GST should be self-sufficient and not require the definitions of other laws in order to justify or explain a levy.
  • The chief minister of Karnataka announced on Monday that he will ask the GST Council for help in directing dealers not to charge customers the new GST fee on “pre-packaged and labelled” goods.
  • He explained that media that these taxes were not intended to be passed on to customers. In responding to a volley of questions on the sudden increase in in pricing of a variety of everyday necessities, including puffed rice and milk-based goods like lassi and curd. These kind of levies of GST on pre-packaged and labelled food items were not meant to be passed on to consumers,
  • In response to a barrage of inquiries about the abrupt rise in pricing of a variety of everyday necessities, including puffed rice and milk-based goods like lassi and curd, he told the media that these taxes were not intended to be passed on to customers.
  • The chief minister insisted that businesses previously did not receive input tax credits under the GST Law for packaging materials used for goods exempt from the GST. They can now claim “reimbursement” of the input taxes they paid due levy on the GST charge, he claimed.
  • Chief Minister’s of The Karnataka explain that however, baffled GST law specialists, who found it misleading. There are barely Most of the things taxable inputs of GST in most of the items that have now been slapped with a 5% levy of GST,
  • “Pre-Packaged Commodity” is defined by Ministry of Finance i.e if the buyer is not present at the place of packaging of commodity having whatever nature, check it whether it sealed or not, so that the quantity of commodity is pre-decided

Companies began producing 25+ kilogramme bundles to avoid GST.

pre-packaged and labelled food items (up to 25kg packing)

  • To circumvent the 5 percent GST on pre-packaged, pre-labelled goods weighing up to 25 kg, Companies selling branded rice, wheat flour, or atta, and pulses have started producing bulkier packs. These pre-packaged foods are primarily intended for kirana shops, where consumers can purchase goods in loose form without paying GST.
  • The Central Board of Excise and Customs stated that 5% tax on smaller packets went into force. Pre-packaged foods that weigh more than 25 kg in a single packet would be free from GST,
  • Manufacturers of grains and pulses are now able to produce single packs weighing more than 25 kg and sell them to kirana retailers. The owner of the kirana shop only needs to rip open the packet and sell the products to consumers in line with their needs
  • In the meanwhile, Confederation of All India Traders (CAIT)  wants the GST on pre-packaged food goods removed.
  • No loose commodities or items are currently being sold in the nation, according to Confederation of All India Traders (CAIT), as even the smallest item, weighing up to 100 grams, is being sold in packaging.
  • “85% of the country’s population uses Non-branded products, and the proposal to levy a tax has been criticised nationwide.

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