The Group of Ministers (GoM) on Goods and Services Tax (GST) rate rationalisation has begun reviewing the classification of food items under different tax slabs to address chronic ambiguities that have led to litigation and revenue leakages.
For instance, millet powder is exempt under GST, but millet biscuit is not, a source aware of the development said. The GoM is also consulting states like Maharashtra, Karnataka and Kerala which have conducted independent research and are handling related litigation, he said. “The GoM on rate rationalisation is looking at some major reforms, at least on the classification front. The GoM is definitely looking at misclassification issues in food and other items. At least to start with, the classification of food items can be sorted. Some other items are also being examined,” the source told Moneycontrol, adding that the effort is to streamline definitions and remove anomalies across the GST rate structure. The classification exercise is part of a wider reform push. Food items are being prioritised due to their political sensitivity and high frequency of disputes in tax treatment – especially when it comes to pre-packaged items versus loose items or branded versus unbranded products, he said