Ice Cream Manufacturers Hope for GST Rate Reduction After Election

Through approaching the President who has duly forwarded their representation to the Finance Ministry the ice cream companies have increased their efforts to lessen the GST rate. After that to reduce the tax they secure key Finance Ministry officials.

There is an 18% GST rate on the ice cream that is sold via shops or parlours. If it is bundled with food supplies by hotels or restaurants, it is considered part of restaurant service and draws 5 percent GST. Any rate reduction could be decided by the GST Council which is anticipated to reach shortly post-new government formation at the Centre and in some states.

Indian Ice-Cream Manufacturers’ Association stated in a representation to the Finance Ministry, that we ask the GST council to lessen the GST rate of ice cream/frozen dessert to 5% across the board, and through the same initiative, the product cost shall decrease consequently increasing the demand/consumption of ice creams amongst the people of India.

An average Indian consumes only 400 millilitres of ice cream against 28.4 litres in New Zealand, 20.8 litres in the USA, and 18 litres in Australia.

Ice cream is counted as a dairy product, as per the companies. Among different dairy products, GST on milk is NIL, while GST is 5 per cent on paneer, curd, lassi, yoghurt, and buttermilk. The majority of the raw materials of ice cream are animal/agriculture based and are levied at the NIL rate of GST or 5/12 per cent as against 18 per cent on ice cream. All this makes the cost of ice cream higher.

The association claimed that up to 40% of the manufacturers have come from an unorganized sector. If up to 5% when the GST on ice cream is drop-down then a majority of the small unorganised companies shall counted under the tax net and the level of compliance shall get higher. Distinct small players (unorganized industry players) will also desire to comply with the law and shall wish to pay taxes instead of tax evasion if there is a reduction in the GST rates. The collection of taxes to the government shall be raised through this.

the ice cream market in India is anticipated to attain over Rs 43,600 crore by 2027 from over Rs 16,500 crore in 2021, showing a CAGR of 17.69 per cent in the next 5 years, according to the International Market Analysis Research and Consulting (IMARC) Group’s Report. It will empower our farmers living in rural areas and will directly improve their living standards. From our end, we offer to market the products by emphasizing the advantages to the rural household and the health advantages of ice cream, the Association cited.

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Till now more than 20 Lakhs people are employed in the ice cream industry in different segments of production, apart from marketing exceeding 1.25 lakh vendors who make a living out of it by selling ice cream vending in strategic locations, the majority of sugar has been consumed by the Ice-cream manufacturing industry. Nearly 50 million and millions more workers are engaged in sugarcane farming. The association ended by saying that their livelihood depends on the ice cream industry.