GST FAQs ON “PRE-PACKAGED AND LABELLED” ITEMS.

In accordance with recommendations issued by the GST Council at its 47th meeting, the new GST rate went into effect on the 18th of July, 2022. One such shift is the transition from the imposition of GST on specified items carrying a registered trademark or brand for which an actionable claim or legally enforceable right exists to the application of GST on such goods when “pre-packaged and labelled.”

Several representations have been received requesting clarification on the scope of this change, particularly with regard to food items such as pulses, flour, cereals, etc.

The following Frequently Asked Questions (FAQ) are provided to address specific doubts/questions regarding the GST duty on “pre-packaged and labelled” items, which came into force today, July 18, 2022: 

S. No.QuestionClarification
 What changed about packed and labelled goods on July 18, 2022?Before July 18, 2022, GST applied to selected items packed in a unit container and having a registered brand name or a brand name with a court-enforceable claim. With effect from July 18, 2022, GST is payable on “pre-packaged and labelled” items subject to the Legal Metrology Act, as specified in future FAQs. Pulses, cereals including rice, wheat, and flour (aata), etc., previously incurred 5% GST when branded and packed in unit container (as mentioned above). Since 18.7.2022, “pre-packaged and labelled” products attract GST. Curd, Lassi, puffed rice, etc., when “pre-packaged and labelled,” will attract 5% GST from July 18, 2022. This changes the way GST is imposed on branded items to “pre-packaged and labelled” commodities.
 What does “pre-packaged and labelled” mean for GST on pulses, cereals, and flours?“Pre-packaged and labelled” means a “pre-packaged commodity” as defined in clause (l) of section 2 of the Legal Metrology Act, 2009, where the package in which the commodity is pre-packed, or a label securely affixed thereto, must bear the declarations under the provisions of the Legal Metrology Act and the rules made thereunder. In the context of food items (such as pulses, cereals like rice, wheat, flour, etc.), the supply of specified pre-packaged food articles would fall within the definition of ‘pre-packaged commodity’ under the Legal Metrology Act, 2009, and the rules made thereunder, if such pre-packaged and labelled packages contained a quantity upto 25 kilogramme [or 25 litre] in terms of rule 3(a) of Legal Metrology (Packaged Commodities) Rules, 2011.
 What is the coverage given the Legal Metrology Act and its rules?Rule 3 (a) of Chapter-II of Legal Metrology (Packaged Commodities) Rules, 2011, exempts food items (pulses, cereals, flour, etc.) comprising more than 25 kg or 25 litres from Rule 6 declaration requirement. GST applies to specified items when pre-packaged quantities are less than or equal to 25 kg. GST is charged on 25 kg of pre-packaged atta sold to final consumers. However, a 30-kg bundle is GST-exempt. Thus, a single package of these commodities [cereals, pulses, flour, etc.] comprising more than 25 kg/25 litre would not fall in the category of pre-packaged and labelled commodity for GST and would not incur GST.
 GST on multi-retail-package shipment?Yes, if numerous retail units, say 10 kg apiece, are offered in a bigger box, GST applies. Manufacturers may distribute such packages. These 10kg packets are for retail sale. A package of rice holding 50 kg (in one individual package) would not be regarded a pre-packaged and labelled commodity for GST duty, even if rule 24 of Legal Metrology (Packaged Commodities) Rules, 2011, requires specific statements on such wholesale package.
 At what stage will GST apply on such supply, i.e., on specified products supplied by manufacturer/producer to wholesaler who sells it to retailer?When a producer, distributor, dealer, or retailer supplies such items to a consumer, GST applies. According to GST Input Tax Credit regulations, the manufacturer/wholesaler/retailer will be entitled to input tax credit on GST charged by his supplier. A threshold exemption or composition scheme provider is entitled to exemption or composition rate, as applicable.
 If a store buys items in packages of up to 25 kg/25 litres but sells them in loose amounts, is tax due?When pre-packaged and labelled, GST applies. When a distributor/manufacturer sells a packed and labelled product, GST applies. If a shop provides the item loose from a package, this is not a packaged commodity supply for GST purposes.
 Whether industrial or institutional users owe tax on packaged goods?Rule 3 (c) of Chapter-II of Legal Metrology (Packaged Commodities) Rules, 2011 excludes industrial and institutional consumers from the Legal Metrology Act. If delivered under rule 3(c), it won’t be regarded pre-packaged and labelled for GST reasons.
 Other issues?The Legal Metrology Act and rules establish exclusion criteria (as indicated above) and grant exclusions under rule 26 of Legal Metrology (Packaged Commodities) Rules, 2011. If delivered so as to attract exclusion or exemption, the item should not be classified as pre-packaged for GST tax.

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