Behind the fuss about GST on essential items: Two sides of the same coin

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The 47th GST council meeting has approved a goods and service tax at a rate of 5% on several basic and necessary goods, such as pulses, rice, cereals, etc. when they are delivered as “pre-packaged and labeled” goods. From July 18, 2022, these modifications are in effect. The imposition of GST on necessities like pulses, cereals, and rice has sparked outrage that it would increase costs and have an adverse effect on a common and poor consumer. Let us understand the fuss about GST on Essential Services or items.

Previous GST Regulations on Essential Items

Previously, these goods were taxed only if they were branded and packaged in a unit container. However, the difference between branded and unbranded goods has been eliminated in order to include all pre-packaged and labeled goods within the GST umbrella, even if they lack a unit container and are unbranded.

Introduction of GST on Essential Items

In the 47th GST Council Meeting, the government announced that levies of 5% are placed on a number of essentials including cereals, rice, and other commodities like pulses starting from 18th July 2022. However, it is important to remember that this change only applies to pre-packaged goods that fall under the Legal Metrology Act, 2009’s definition of “pre-packed commodity.”

Read about other Important GST Rate Changes: CBIC notifies GST rate changes, effective from July 18

Other Side of the Implementation of GST on Essential Items

These modifications only apply to products regulated by the Legal Metrology Act, the majority of which are already being sold with the brand name after incurring GST. Therefore, unlike the recent windfall tax on fuel, it is unlikely to result in any appreciable increase in revenue collections.

The Union Finance Minister made it clear that there were worries about income leakage since some companies were abusing the exemption rule for unlabelled food goods by failing to register them. Due to this, it was decided to revoke the exemption and put pre-packaged and labeled food products under the GST ambit.

Understand about Exemptions Withdrawn under GST: GST Exemptions Withdrawn on various consumable items and services

Finance Minister on GST on Essential Items

With the exception of two or three products, the Finance Minister made it clear that GST Rates have not been changed significantly and only the mechanism of implementing GST has been changed.

Second, any modifications to the GST may only be put into effect by agreement between the Center and the States, based on a method that has been spelled out in detail in the form of the GST council’s recommendations. She also clarifies it is not a solitary decision, but rather one based on a greater consensus.


As per experts, It is important to remember that the government will continue to have difficulties in expanding the tax net until a sizable portion of society is included in the tax system and complies with the law in both text and spirit. Therefore, these tweaks such as GST on essential items  and several other changes to GST legislation might come up from time to time.

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