Under the current norms, GST on staples such as rice, wheat and cereals is zero. But branded ones with trademark registration will attract GST of 5%.
In a letter to Jaitley, dated 6 July, AIREA president Vijay Setia said that only 10% of the rice brands in India have a trademark registration. The current norm will benefit the “companies with Rs 2,000 crore revenue and above as their brands are not registered with Trade Mark Act 1999 due to some legal and technical issues.”
According to Setia, this will result in no traders willing to stock the registered branded products as they would like to stay out of the GST net.
The country’s largest selling rice brand India Gate, owned by KRBL Ltd, does not have the trademark registration, Mint reported on 6 July. Three other brands of KRBL, namely India Farm, Lotus and Unity, are also not trademarked. However, KRBL uses the trademark sign on the packages of India Gate basmati rice.
LT Foods Ltd, which sells basmati rice under the Daawat brand, has the trademark registration for only a few variants of Daawat.
Amritsar-based rice company Amar Singh Chawal Wala, the seller of Lal Qilla basmati rice, has also written to Jaitley expressing concern on the same.However, the finance ministry had on 5 July issued a clarification stating that “registered brand name” is a brand name or a trade name “which is registered under the Trade Marks Act, 1999” and should be on “the Register of Trade Marks and remain in force”.
AIREA became vocal after KRBL, on 3 July, wrote to its distributors saying that four of the company’s brands, including India Gate, are not registered in Class 30 under the Trade Marks Act 1999, hence “nil” GST rate is applicable on them. Before GST kicked in on 1 July, branded rice companies were either exempt from tax or were paying 5% value-added tax depending on the state where the products were sold.
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“We are following the government norms,” said a KRBL spokesperson. LT Foods declined to comment on the issue.
Meanwhile, the government is likely to relook at the current tax structure on rice and other edible commodities as established brands are taking advantage of the current rules to claim exemptions from GST, according to a 7 July report in The Economic Times.