GST on pre-packaged items

The Central Board of Indirect Taxes and Customs on July 17 said single packages of food items like cereals, pulses and flour weighing up to 25 kg will be considered as ‘prepackaged and labelled’, and liable to five per cent GST from July 18.

• It also clarified that if a retail shopkeeper supplies in loose quantity the item bought from a manufacturer or a distributor in a 25-kg pack, such sale to consumers will not attract GST.

• In the context of food items (such as pulses, cereals like rice, wheat, flour etc), the supply of specified pre-packaged food articles would fall within the purview of the definition of ‘pre-packaged commodity’ under the Legal Metrology Act, 2009, if such pre-packaged and labelled packages contained a quantity up to 25 kilogram (or 25 litres).

• It is clarified that a single package of these items (cereals, pulses, flour etc.) containing a quantity of more than 25 Kg/25 litre would not fall in the category of pre-packaged and labelled commodity for the purposes of GST and would therefore not attract GST.

• The CBIC said the supply of pre-packed atta meant for retail sale to ultimate consumer of 25 Kg shall be liable to GST.

• However, supply of such a 30-kg pack thereof shall be exempt from levy of GST.

• The board also said that GST would apply on a package that contains multiple retail packages, for example a package containing 10 retail packs of flour of 10 kg each.

What does pre-packaged and labelled mean?

• The Finance Ministry has notified GST rates for various goods sold as pre-packaged and pre-labelled beside others, which was decided by the 47th GST council meeting held in Chandigarh.

• The notification, said that “expression ‘pre-packaged and labelled’ means a ‘pre-packaged commodity’ as defined in clause (l) of section 2 of the Legal Metrology Act, 2009. Under the Legal Metrology Act “pre-packaged commodity” means a commodity which without the purchaser being present is placed in a package of whatever nature, whether sealed or not, so that the product contained therein has a pre-determined quantity.

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