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GST Effect: FCI Expected to Save Rs. 5,000 Crores Annually
May 25, 2017
As per the Good and Services Tax regime, the Food Corporation of India (FCI) will be able tosave about Rs. 5,000 crore every year as it won’t have to pay 5% Value Added Tax which it’s been paying in the current taxation system. Under the GST scheme, the government has decided to give exemption to foodgrains, which will thus be taxed at 0% rate.
According to estimates, FCI paid a net tax of Rs. 12,000 crore on foodgrains in the last fiscal, out of which VAT makes up for about Rs. 5,000.
Since GST will reduce the taxes paid by the FCI for the procurement of the grain, it will help improve the food subsidy budget. Consequently, food prices on items like rice, wheat, etc. are expected to drop.
