GST will help lower food inflation by 2 per cent: Radhamohan Singh

NEW DELHI: India has said that the implementation of the Goods and Services Tax (GST) will benefit farmers and reduce food inflation, as grain and milk would remain exempted under the new regime that would put in place a single levy instead of multiple taxes.

“With the GST coming, inflation will come down by 2%,” federal farm minister Radhamohan Singh said in New Delhi. There has been no major increase in tax slabs for agriculture produce, and it was beneficial for both farmers and consumers, Singh said.

Currently, both the tax-payer and the consumer were paying levies to both the state and the Centre on the sale of produce, leading to increase in the prices of commodities, Singh said.

Under the GST, agriculture produce from foodgrains, oilseeds, fruits and vegetables, milk, spices, fish, meat, and sugarcane will attract zero duty.

“In some commodities such as cream and flavoured yogurt, the tax has come down to 5% from 12.5%. Similarly, in ice-cream the tax was 12.5%, but now it is 5%, which is good news,” said Singh.

Separately, Ramesh Chand, member of the government's premier think tank Niti Aayog, said that GST was required to promote economic development and growth.

“GST is a step to make entire India one market. There have been different tax structures in states on same commodities and it was difficult to integrate these markets.

Now that there will be uniform taxation, we can promote the national agriculture market (eNAM),” Chand said. Currently, 417 mandis in 13 states have been integrated with eNAM.

With a national agriculture market, competition will increase, ensuring better returns to farmers and promoting efficiency in transport, trade and transactions, Chand said.

At present, some state governments were levying high taxes: For instance, wheat and paddy attracted about 14% taxes in Punjab, deterring private players from buying grains in the state. Wheat and paddy, which account for a major share of the commodity basket, will attract no tax under GST, said Chand.

“It will be cheaper for the consumer and lead to an increase in demand from the producer. Most of the agriculture commodities are in the zero-tax bracket, which is a positive for the agriculture sector and farmers,” he said.