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Confused By GST, India's Sweet Makers Are Forced To Swallow A Bitter Pill

Uh oh.

26/07/2017 12:06 PM IST | Updated 26/07/2017 12:12 PM IST
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The next time you bite into a laddoo and close your eyes in bliss, spare a thought for its makers, who, for all you know, are struggling to keep up with the whims of the Government of India.

The imposition of the recent Goods and Services tax (GST) from 1 July has meant unending headaches for the manufacturers of sweets. The confusion started with different rates of taxation on different kinds of ingredients used in the making of these products. Although it's soon going to be a month since GST came about, no clear solutions seem to be in sight.

According to reports, the distress begins at the stage of classifying a product. For instance, is dhokla, a Gujarati delicacy, to be categorised as cake and halwa be counted as jelly? Then there is the trouble with affixing a tax rate to even sweets of one genre. A plain rasgulla may attract 5% GST, but if it is packaged, it will be levied at 18%. Barfi or sandesh with chocolate coating or layers of nuts and dry fruits will have to be priced higher (taxed at 28%) from their plainer varieties.

The result: long queues at sweet shops, heated exchanges between customers and sellers, leading to the phasing out of too many variants in favour of more straightforward items.

The worst-hit by the new rules are the traditional sweet-makers and small businesses run out of holes in the wall. In Thoothukudi district of Tamil Nadu, for instance, makers of karupatti, a sweet made for the last 80 years with palm jaggery, are staring at a crisis, as local supermarkets are refusing to accept their products without an inclusive GST bill. The dilemma involves whether to count it as sugar candy or to treat it as exempt from sugar taxation since it is made of palmyra extract, an organic product sourced naturally. The fates of peanut candy and macaroons are also in the same fix.

In Bengal, where there are over 100,000-150,000 sweet shops at an informal estimate, many of which operate out of tiny local establishments without computers or formal accounting systems, the effect has thrown the public into disarray. The future of about 750,000 workers in this sector is also under a cloud.

For a people used to consuming different kinds of sweets on a daily basis, buying this staple item of their diet is posing grave challenges. While acclaimed rasgulla-maker KC Das is cutting down on the number of variants for its customers, another renowned establishment has complained about the North Indian bias of exempting lassi from the GST but including mishti doi (a yoghurt-based product, consumed almost daily by many Bengalis as dessert) under the 18% taxation slab.

As of now, there doesn't seem to be a sweet ending to this bitterly-unfolding saga.

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