New Delhi, Feb 20 (KNN) Keeping in view that MSMEs have predominance in biscuit manufacturing and retail industry, the sector has urged the GST Council to keep biscuits in its lowest slab.

The Federation of Biscuit Manufacturers of India (FBMI) said biscuits should be kept in its lowest slab under GST since biscuits are an item of mass consumption and higher taxation on it would adversely hit biscuit production as well as its consumption and hence employment in the industry.

"Multiple rates within a sector will lead to classification disputes and complex record-keeping and compliance system. There is a predominance of the small and medium enterprises (SMEs) at the retail level and they will be ill-equipped to handle multiple rates. Thus, in the interest of simplicity, all food items including biscuits should be taxed at a uniform, low rate," said FBMI.

The Federation pointed that higher rate of tax would impact demand in the entire value chain.

This in return will hit the procurement of raw materials by biscuit manufacturers that would adversely impact farmers across India.

Lower demand will also negatively impact investments, exports and employment in the food industry.

Lower and uniform GST rate on Biscuits will also help India to be in line with international best practices, wherein countries such as New Zealand, Singapore, Denmark and Japan, have a single lower VAT rate for all goods including biscuits, though Biscuits are treated as non-taxable basic grocery in countries such as Canada and UK.

In a representation sent on to GST Council by FBMI, it has been emphasized biscuits be taxed within the lowest slab of GST for Foods.

Tax rates should apply uniformly across the entire supply chain, from one end, to another so as to encourage value added activities in the farm produce and food sector. GST provides the right opportunity to correct the current anomalies.

Under GST, there should be no discrimination while taxing food products on the basis of their being branded or un-branded, or premium or non-premium products, as this will encourage value addition across the chain from farm to plate, added FBMI.