Finance Minister Nirmala Sitharaman on Tuesday said the 5 per cent tax is being levied on wheat flour and other items after nod from all states, including non-BJP ruled states.
Non-BJP ruled states of Punjab, Chhattisgarh, Rajasthan, Tamil Nadu, West Bengal, Andhra Pradesh, Telangana and Kerala had agreed to imposing the 5 per cent levy, she said. In a series of tweets, Sitharaman said states levied sales tax or VAT on foodgrains in the pre-Goods and Services Tax (GST) regime and the present levy on cereals, pulses, flour, curd and lassi is an exercise to curb tax leakage.
The decision was taken by the GST Council, where all states are represented, through a consensus, finance minster said. The minister's comments come against the backdrop of the first two days of the monsoon session of Parliament virtually getting washed away due to vociferous protests by Opposition parties over the GST on daily use items and other issues.
"Is this the first time such food articles are being taxed? No. States were collecting significant revenue from foodgrain in the pre-GST regime. Punjab alone collected more Rs 2,000 crore on food grain by way of purchase tax. UP collected Rs 700 crore," the minsiter said.
Sitharaman also cited Value added Tax on rice levied prior to 2017 in Punjab Telangana, Uttar Pradesh, Andhra Pradesh, Kerala and Bihar to buttress her point.
“Of late, the GST Council in its 47th meeting recommended to reconsider the approach for the imposition of GST on specified food items like pulses, cereals, flour, etc. There have been a many misconceptions about this that have been spread,” she said.
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