The GST Council in its 49th meeting held on 18th February 2023 made an important recommendation regarding the GST rate on Rab. Accordingly CBIC issued notifications dated 28/02/2023 to modify the tax rates on rab.
Further, CBIC has issued Circular No. 191/03/2023-GST dated 27th March 2023 to clarify the GST rate on Rab, as under:
CBIC GST Circular 191/03/2023 dated 27/03/2023: GST Council Clarifies Nil & 5% GST Rate on Unpackaged/Pre-Packaged Rab
5% GST Rate on Pre-Packaged and Labelled Rab
i) The circular clarifies that with effect from 1st March 2023, pre-packaged and labelled Rab will attract 5% GST.
ii) This means that Rab sold in packaged form with MRP printed on it will be charged 5% GST.
Nil GST Rate on Unpackaged Rab
i) The circular also clarifies that unpackaged Rab, sold loose without any packaging, will be exempt from GST and nil rate will be applicable.
ii) This provides relief to small retailers and hawkers selling Rab without any packaging.
Regularization of Past Transactions
i) The circular states that in view of prevailing divergent interpretations on GST rate on Rab, all past transactions are regularized on “as is” basis.
ii) This provides retrospective relief for the confusion over GST rate on Rab in the past. No retrospective action would be taken.
Removal of Interpretation Divergence
i) The circular aims to remove divergent interpretations regarding GST rate on Rab which has led to confusion.
ii) The clarification will create uniformity in application of GST rate on packaged and unpackaged Rab.
The clarification on 5% GST rate on packaged Rab and nil GST rate on loose Rab by the GST Council is a positive move that will benefit both industry and consumers. It resolves the long standing confusion over GST rate on various forms of Rab.
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