Like tax for like products

Like tax for like products

Like tax for like products


March 24, 2017
New Delhi

Like tax for like products


Federation of Biscuit Manufacturers of India (FBMI), representing Rs.27,000 crores, organized biscuit Industry, is proud to be a part of the ONE NATION, ONE MARKET initiative, to be achieved through GST.  FBMI, affiliated to PHD Chamber of Commerce and Industry has been supporting various initiatives of the government for more than 60 years. It has contributed to the nation’s goals of achieving food safety, food fortification and wastage reduction.

FBMI is fully supportive of the mammoth efforts of the Government in transforming the current indirect tax regime through GST, through participative and consensus-building process.

With 93% of the food basket comprising basic food, which is proposed to be exempt or taxed at lower GST rate, taxing the remaining 7% that comprises processed food items at higher GST rate will not be in the interest of fairness and simplicity, the basic goals of GST.

Biscuits are an affordable and nutritious food item for all ages and socio-economic segments, consumed by 85% of all households and across all income segments in India.  Commensurate with the growth in the aspiring middle class, there has been an increase in the consumption of all types of biscuits. More varieties are now available and being bought across all income segments.  Given this, the tax system should not distort or interfere with the different products being introduced in the market, nor with the choices among them.

Differentiating between different varieties will create complexity and classification disputes

FBMI does not endorse differentiation in GST rates within biscuits, as  all varities of biscuits, such as cookies, creams, crackers and glucose, are available at the same price points. 

Any distortion in the rates within competing products in this sector will create artificial layers. It will encourage spurious products to the detriment of the consumers. Moreover, it will make GST complex to administer and difficult to comply with by the traders, kirana stores etc. involved in the sale of these products.  There is a predominance of the SMEs at the retail level and they will are ill-equipped to handle multiple rates within a sector or industry. GST provides the right opportunity to correct these anomalies, by providing a simple uniform lower GST rate on all biscuits, instead of price based taxation.

Further, discriminationof food products, on the basis of their being branded or un-branded, premium or non-premium, will not only be against the principles of efficiency and equity, but will also lead to classification disputes and complex record-keeping and compliance system.

Hence, FBMI, in a representation to the Government, has requested for a fair, simple, equitable and neutral GST regime.  This will be in line with the other good policy initiatives being taken by the government, such as ease of doing business and a liberal FDI policy, to attract new investors in the food processing sector in India and encourage existing businesses to expand.

FBMI is of the view that GST regime can reach its optimum efficiency in tax collection, by expansion of tax base within biscuit industry at lower merit rate and not by taxing a section of the consumers at higher rates at the cost of others.

A higher GST rate, even for a segment of biscuits, would impact demand in the entire value chain. It would result in cutting down on procurement of raw materials by biscuit manufacturers, that would adversely impact farmers across India.  Lower demand will also negatively impact investments, exports and employment in the food industry.


Koteshwar Prasad Dobhal
Consultant (PR)