Household food expenses to drop significantly after tax on staples slashed

The GST Council, led by Finance Minister Nirmala Sitharaman, slashed taxes on daily essentials and packaged foods ahead of the festive season. UHT milk, paneer, parathas, biscuits, chocolates, dry fruits, and dairy products now attract lower or nil GST, boosting consumption outlook

New Delhi: Ahead of the festive season, the GST Council, led by Union Finance Minister Nirmala Sitharaman, has announced significant reduction or tax exemption on several food items, packaged food and daily essentials.

UHT milk, paneer, pizza bread, rotis, and khakhras will now have zero tax after GST 2.0, reduced from 5 per cent. Parathas and parottas, previously taxed at 18 per cent, are now in the nil bracket.

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GST on key dairy items like butter, ghee, and cheese has decreased from 12 per cent to 5 per cent. Prices for condensed milk and various packaged foods, including jams, sauces, pickles, and fruit juices, will come down.

Dry fruits and nuts, including almonds, cashews, pistachios, and dates, will now be taxed at 5 per cent instead of 12 per cent. Biscuits, cakes, chocolates, cornflakes, soups, and ice cream will also see a tax reduction to 5 per cent from 18 per cent.

The move was announced by the GST council even as inflation is cooling, with headline retail inflation dropping to 1.55 per cent in July, the lowest since June 2017.

Food inflation has also slipped into negative territory (1.76 per cent), the lowest since January 2019. Families are expected to benefit from relief after experiencing volatile household expenses earlier this year due to changes in vegetable prices.

Packaged food manufacturers are set to quickly pass on the benefits. Executives announced that grammage in Rs 5 and Rs 10 packs, which have been reduced in recent years due to rising input costs, will be restored.

Analysts predicted that snack makers will benefit significantly, as GST on these products is expected to decrease from 12 per cent to 5 per cent. The move by GST council is expected to boost the consumption sector, which rose 7 per cent in the June quarter due to stronger rural demand.