GST on Branded/ Unbranded Vs. Pre-Packaged and Labelled Commodities || CA Bimal Jain

GST on Branded/ Unbranded Vs. Pre-Packaged and Labelled Commodities || CA Bimal Jain
As per earlier Goods and Services Tax (GST) provisions, GST was exempted in case of unbranded or branded commodities, wherein, rights are forgone. However, the entire concept of the same is changed with effect from 18th July 2022.

From 18th July 2022, GST will be applicable in case the commodity is pre-packaged and labelled. Accordingly, GST will be exempt if the commodity is not pre-packaged and labelled. Notably, the amendment is made applicable to chapter 1 to chapter 21 of the tariff.

Pre-packaged commodities mean the commodities which are pre-packed and label is affixed thereto and which required declaration as per Legal Metrology Act. It is important to note that GST will not be applicable when the commodities are sold in loose.

Notably, the declaration provisions in case of retail pack is covered under section 18 of the Legal Metrology Act read with rule 3 and rule 6 of the Legal Metrology (Packaged Commodities) Rules, 2011.

It is clarified by the Government that GST will not be applicable in case that package is more than 25 KG or 25 Litres. Accordingly, GST is payable on the package up to 25 KG or 25 Litres.

Importantly, it is also clarified that retailer selling any package up to 25 KG in loose (in say 1 KG, 5 KG, etc.) than GST will not be applicable. However, the same package will already have suffered GST which would be charged by manufacturer to dealer; dealer to distributor and distributor to retailer. Accordingly, the retailer (who would have paid GST on purchase) will not able to avail input tax credit.

Further, it is also clarified that GST will not be payable in case the package (whether below or above 25 KG or 25 Litres) is sold to institutional or industrial buyers.

#gst #gstupdates #GSTonbranded

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