Ice cream manufacturers hope for GST rate reduction after election

Gst on icecream

GST rate on icecream: The ice cream producers have stepped up their attempts to lower the GST rate by contacting the President, who has dutifully passed their representation to the Finance Ministry. They then secure important Finance Ministry personnel in order to lower the tax.

The GST rate on ice cream sales through stores or parlors is 18%. If hotels or restaurants package it with food supplies, it counts as restaurant service and is subject to 5% GST. The GST Council, which is expected to convene soon after the establishment of new central and state governments, may opt to lower rates.

In a letter to the Finance Ministry, the Indian Ice-Cream Manufacturers’ Association requested that the GST council lower the overall tax rate on ice cream and frozen desserts to 5%. This initiative would also lower the cost of the product, which would increase Indian consumers’ desire for and consumption of ice cream.

Compared to 28.4 litres in New Zealand, 20.8 litres in the USA, and 18 litres in Australia, an average Indian only drinks 400 millilitres of ice cream.

The firms classify ice cream as a dairy product. Milk is exempt from GST among other dairy goods, while paneer, curd, lassi, yoghurt, and buttermilk are subject to 5% tax. Since most of the ingredients used to make ice cream come from agriculture or animals, they are subject to GST at the NIL rate, or 5/12%, as opposed to 18% for ice cream. Because of all of this, ice cream costs more.

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According to the group, up to 40% of manufacturers are from the unorganized sector. The majority of small, unorganized businesses will be included in the tax net and compliance will increase if the GST on ice cream is dropped by up to 5%. If the GST rates are lowered, distinct minor players (unorganized industrial participants) will also want to abide by the law and will prefer to pay taxes rather than evade taxes. This will increase the amount of taxes that are collected for the government.

The ice cream market in India is predicted to attain over Rs 43,600 crore by 2027 from over Rs 16,500 crore in 2021, displaying a CAGR of 17.69 per cent in the next 5 years, according to the International Market Analysis Research and Consulting (IMARC) Group’s Report. It will directly raise the standard of living for our rural farmers and give them more influence. As stated by the Association, we offer to sell the products by highlighting their benefits for the rural home and the health benefits of ice cream.

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