The Indian Vegetable Oil Producers' Affiliation (IVPA) stated the Items and Providers Tax (GST) Council's restriction on refunds of gathered Enter Tax Credit score (ITC) underneath the inverted obligation construction was inflicting money stream issues, notably for small and medium enterprises.
Beneath the present system, edible oil attracts 5% GST whereas enter supplies akin to packaging, chemical substances and processing supplies are taxed at 12-18%, resulting in substantial accumulation of unutilised tax credit.
“With refunds blocked, firms face working capital shortages and disrupted money flows, making operations much less viable, particularly for MSMEs and home producers,” the IVPA stated in an announcement.
The affiliation stated that increased prices as a consequence of unrecovered tax credit are handed on to shoppers, probably driving up costs and pushing lower-income consumers towards unsafe or adulterated oils.
The edible oil business had been receiving ITC refunds till the 2021-22 monetary yr underneath current GST provisions earlier than the Council imposed restrictions in July 2022.IVPA requested the federal government deal with edible oils on par with different important consumables like butter and ghee, which proceed to obtain refund advantages, and stated coverage stability was essential for funding and decreasing import dependency.
