Plan afoot to reclassify items for GST clarity in FMCG sector
Central Board of Indirect taxes and Customs (CBIC) is planning to prepare a list of products which end up in litigation purely due to classification issues.
The fitment committee is likely to look into such items where there is a minor change in composition but the tax slabs are different, creating confusion in tax liability, mostly in the fast-moving consumer goods (FMCG) sector, which recently attracted many tax notices.
The list will be referred to the group of ministers on rate rationalisation committee when the Goods and Services Tax (GST) Council meets next, said people aware of the matter.
«Classification issue is a problem with some products and the fitment committee is working on the detail list where there is grey area and which has attracted maximum litigation,» a senior official told ET on condition of anonymity.
There are 25-30 goods and services where there is overlapping of categorisation, the official said.
The matter was also flagged by finance minister Nirmala Sitharaman, who in her meeting with enforcement officials of central and state goods and services tax asked the board to fix the classification related issues on a «priority» basis.
«The fitment committee is looking into the matter and when the council meets next, the proposal will be referred to the group of ministers on rate rationalisation,» the official said.
Immediate Trigger
In November last year, many FMCG companies, which were making chips and namkeens by «extruded» method were asked to pay 18% GST, instead of 12% and
