GST: Biscuit makers voice concern over tax anomaly

Hyderabad: Latest imposing of 18 percent GST came as jolt to biscuit makers, who have already been reeling under margin pressure owing to surge in raw material prices such as wheat flour, sugar, oil, etc.

The biscuit industry in Telangana mostly from Katedan industrial area, a major hub for biscuits and confectionary manufacturing in the country, seeks GST exemption. While expressing its concern over the increased tax burden, Telangana Biscuits, Wafers Confectionery Manufacturers’ Association (TBWCMA) has decided to make a representation to the Centre.

So far, it’s four percent excise duty and 14.5 percent sales tax, says Shriprakash Loya, adviser to TBWCMA and former president of Federation of Biscuit Manufacturers of India. “Excise duty was exempt for biscuits up to Rs100 per kg. Adding to this, sales tax above 14.5 percent makes a total tax component of 18.5 percent on biscuit makers. Now, GST is fixed at 18 percent.

Now, excise duty exemption upto Rs100/kg has gone under GST regime. This is another burden in addition to 18% GST. We demand total GST exemption. Biscuits are common man’s food. We request the Centre to exempt biscuits from GST,” Loya told The Hans India.

The rise in raw materials prices and packing material costs is taking a toll on the biscuit makers. “Of course, we get input credit under GST. Those under less than Rs100 per kg excise duty exemption are not getting input credit. No excise duty for units upto Rs three crore, but only 25 percent biscuit manufacturers fall below Rs3crore threshold,” adds Loya.

Until 20 years ago, Hyderabad was number one destination in the domestic biscuit making sector as the city has been considered as a specialised place for biscuit making because of availability of skilled manpower and ideal atmosphere.

Katedan is the prime location for biscuit makers and recently few more units came up in Medchal thanks to the availability of piped gas. Britania, Parle and ITC account for lion’s share in biscuit business, while local units sell their products on their own brands. Over half the units do under take job works for corporate brands and managing to stay afloat in the market.

Of late, Shadnagar and Shamirpet are also catching up in this segment. Small biscuits makers are facing competition from Parle, Britannia and ITC. Adding to this, the cost of production has surged significantly. Since corporate majors do bulk business, in both sales and purchase of raw materials, they get bigger discounts. But small and medium manufacturers don’t have such privilege and running on thin margins, he said.

By Sreenivasa Rao Dasari