GST Council Refers Ice Cream Makers Composition Scheme to Assembly Committee

The ice cream industry will have to wait until it is included in the composition system of the Goods and Services Tax, with the GST Council referring the matter to the assembly committee.

This problem is critical for small ice cream makers. Last February, the Delhi High Court said the GST Council should reconsider excluding ice cream from the list of manufacturers eligible for the composition scheme within three months. Under this scheme, appraisers, manufacturers and traders of goods must pay 1 percent of turnover as tax; restaurants not serving 5 percent alcohol; and other service providers 6 percent. Businesses with an annual turnover of up to ₹ 1.5 crore can opt for a compounding system, but they will not benefit from the input tax credit.

Added value

According to a senior government official, this issue was referred to the GST Council on Friday. “He asked the assembly committee to look into this matter further,” he said. Activity area.

The Committee observed that the impact on revenue of including ice cream in the composition has important implications as it has a high added value.

“The Committee also considered that it was necessary to carry out a detailed study of the coverage (inclusions and exclusions) of the composition scheme, in particular with regard to sectors where added value and consumption are important”, said he declared.

Another official said that even under the pre-GST regime, the ice cream business was not part of the makeup in a number of states. Using data provided by Amul, he said that for every ice cream made worth ₹ 100, ₹ 54 of milk and cream is used, which is exempt from GST. “The total tax paid on inputs valued at ₹ 100 is ₹ 4.17, which is less than 5% of the value of the inputs. Therefore, the ice cream maker is required to pay a significant portion of the debt in cash because the input tax credit is low, ”he said.

Market size

According to 2019 data, the Indian ice cream market is around ₹ 15,000 crore. Brands such as Amul and Kwality Walls dominate the market with almost three quarters of the shares. There are other big players like Vadilal, Naturals, Havmor, Mother Dairy, etc. However, there are many small suppliers operating locally who can have a turnover of up to ₹ 1.5 crore.


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