In what could be a relief for the domestic edible oil industry and to ensure there is level playing field, the department of food and public distribution is pitching North Block to levy 5 percent GST on de-oiled rice bran (DORB).
According to sources, “Department of food and public distribution secretary Sudhanshu Pandey in a letter to revenue secretary Ajay Bhushan Pandey has called for an urgent imposition of 5 percent GST on de-oiled rice bran.”
Food department is of a view that the country needs to increase domestic production of rice bran oil which is now only 60 percent of its potential. The move will also help in Atma Nirbhar Bharat program.
“Department is striving to increase domestic production of edible oils and thereby reduce our dependence on imports which is 60 percent of the total consumption. ln order to increase domestic production of edible oils, it was felt that ways of increasing the domestic production of rice bran oil in the country, which is now only 60 percent of its potential, be explored. Taking this forward, committee of secretaries (CoS) in its meeting held on January 28, 2021 recommended that the production of rice bran oil may be increased in the country for domestic use and the same may be promoted extensively as healthy medium of cooking,” department of food and public distribution secretary’s letter said, which has been reviewed by CNBC-TV18.
Food ministry is also of a view that “once the levy is introduced it will dis-incentivize the sale of rice bran directly to feed manufacturers as de oiled rice bran, thereby increasing the availability of rice bran for oil extraction,” sources in the know of the matter confirmed.
Food ministry also feels that the levy will “prevent loss to the exchequer on account of sale of rice bran as de-oiled rice bran by unscrupulous traders. And will also be beneficial to the oil extraction units in the form of input GST offset on rice bran oil.”
Currently, GST on rice bran (before oil extraction) and raw rice bran oil is 5 percent but de-oiled rice bran doesn’t have any GST. It is also understood that the matter will also be soon taken up by committee of ministers headed by home minister, which looks into the price status and availability of essential food items and edible oil in the country.
According to sources, the rationale explained by the food ministry is that currently, “Rice bran is sold directly to animal feed producers directly from the un-organised market or billed as de-oiled rice bran, so as to avail nil GST. Rice bran and de-oiled rice bran are similar in appearance and cannot be differentiated. This results in less availability of rice bran for oil extraction. 5 percent GST may be imposed on de-oiled rice bran so as to level the playing field and dis-incentivize the sale of rice bran directly to feed manufacturers as de-oiled rice bran, thereby increasing the availability of rice bran for oil extraction. lt will also prevent loss to the exchequer on account of sale of rice bran as de-oiled rice bran by unscrupulous traders. It will also be beneficial to the oil extraction units in the form of input GST offset on rice bran oil.”
However, the key here is that any decision on GST rates, whether to levy or to reduce taxes or to even introduce a new item under the GST ambit is not taken by the finance ministry. Any such decision rests with the GST Council, which the governing body including finance ministers of states and Centre.
When it comes to rates, the process laid down by the GST council rules is that the GST Council nominated fitment committee looks into the proposals made by various stakeholders. This Fitment committee, which is a mix of Centre and state officers then looks into the rationale, impact, assesses the industry response and a lot of other factors before making its recommendation to the council. The council is empowered to either accept or reject the recommendation made by the fitment committee.
Source from: https://www.cnbctv18.com/economy/food-department-seeks-5-gst-levy-on-de-oiled-rice-bran-8283731.htm