The latest circular issued by the Central Board of Indirect Taxes & Customs (CBIC) based on recommendations of the GST Council clarifies that rice sold in loose quantities greater than 25 kg is not classified as an ‘agricultural farm produce’ and may attract a higher GST levy. The circular seeks to clarify the scope of expression ‘pre-packaged and labelled’ for levying GST on the supply of agricultural farm produce. The definition of agricultural produce is based on the Finance Act 1994, which states that any produce of agriculture on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for the primary market. This means that rice, which is the final product obtained by milling the paddy by a rice miller, may be subject to a higher GST levy.
Source a2ztaxcorp
