Craving baked goods? Prepare to spend 10-15% extra
GST may soon affect the prices of bakery items and not in a good way. Bakery items, previously exempt are now under GST's purview and hence bakers are considering increasing prices. A 10-15% hike is anticipated. While bread continues to be exempted, the bakers can't get Input Tax Credit (ITC) on the raw materials which will lead to the hike.
GST and how it made tomatoes disappear
Inflation has been the most rampant side-effect of GST and it was evident in the soaring vegetable prices. Samiran Chakraborty, chief India economist at CITI, attributed the rise in retail inflation to tomatoes prices. The vegetable touched Rs. 120 on 26 July in Mumbai. In June, tomatoes were available for Rs. 25 per/kg in Delhi but now stood at Rs. 100 per/kg.
How is tomato inflation related to GST?
Analysts believe that Goods and Services Tax (GST) has pushed the tomato prices as transporters refused to take orders and reduced their regular bookings to evade GST. Others had not registered on the GST Network (GSTN) which further delayed orders.
Confusion hits the sweet business, post GST
The Indian sweet tooth seems to be caught in the middle of GST confusion. Shopkeepers complained of confusing GST slabs. For instance: a plain barfi levies 5% GST. However, if it contains dry fruits, it attracts 12% GST and 28% if it has chocolate. Moreover, namkeens and savories attract 12% GST while mithai gets 5% which shopkeepers feel is unfair.
Post GST, 40% dip in home deliveries from restaurants
A month after the GST rollout, restaurants claim that their home delivery orders have dipped by 18%. With 18% GST levied on home delivery orders, customers feel that their total food bill increases in spite of not eating at the restaurant. However, popular online food outlets such as Faasos and Zomato said there had been growth and it was still early to judge.
Ghee prices shoot up in North, while the South rejoices
The rollout of uniform GST may have brought cheer to south India's dairy industry but it will lead to hiked prices in the North. Ghee which was widely sold during festive months, previously attracted a 5% VAT in North and 14.5% VAT in the South. GST on ghee is now 12% pan-India and an additional 7% tax in North, which may impact its sales.
The baker's dilemma
Bakers claim that GST is forcing them to hike prices with GST rising from 5 to 18% for certain goods like Khari biscuits. Even toast and pizza base now invites a 5% GST. Ingredients used to improve the longevity (yeast, improver) too carry 18% GST. Moreover, there is VAT on petroleum items which bakers use as fuel (no Input Tax Credit on this either).
