The 55th GST Council met under the Chairpersonship of Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman in Jaisalmer, Rajasthan, today.Â
The council has recommended the concessional 5% GST rate on food inputs of food preparations under HSN 19 or 21 that are supplied for food preparations intended for free distribution to economically weaker sections under a government program subject to the existing conditions.
The concessional 5% GST rate on food inputs (like ingredients, raw materials, or products used in food preparation) directly reduces the tax burden on the cost of production. This lower tax rate applies to food ingredients that are part of food preparations being made for distribution under government welfare schemes.
For example, the food inputs like wheat, rice, sugar, pulses, or cooking oils used in preparing food items (such as packaged or ready-to-eat meals) will be taxed at a reduced rate of 5%, instead of the regular GST rates.
Lower tax rates reduce the overall cost of production for these food preparations. The government can thus save money or allocate more funds for other aspects of the program, enhancing the effectiveness of food distribution to economically weaker sections. This is especially important for welfare programs like the Public Distribution System (PDS), Mid-Day Meal Schemes, or other community-based nutrition programs.
By ensuring that the food preparation costs are lower due to the concessional GST rate, governments can potentially increase the quantity of food distributed or improve the quality of food while keeping expenditure in check.
