Coconut oil manufacturers are agitated over the reported move to hike GST on packed edible coconut oil from five to 18 per cent.
“There is no logic in such a recommendation as Kerala is the only state using coconut oil for edible purpose”, said Thalath Mohammed, Director of Cochin Oil Merchants Association (COMA). The move, if implemented, will see a consumer shift to cheaper edible oils as the GST on coconut oil would come around ₹18 per kg, he added.
Of late, the coconut oil market in Kerala has been witnessing a declining trend after Onam mainly because of higher arrivals of copra and raw nuts from production centres of Andhra Pradesh, Karnataka, Tamil Nadu, etc. “I think even this five per cent GST on coconut oil should be withdrawn and it is brought under a zero tax regime like rice and raw coconut considering it as a food item”, Mahmood told BusinessLine.
An official source familiar with the development pointed out that the Fitment Committee recommendation indicated 18 per cent GST on coconut oil in unit containers of less than one litre and five per cent on units sold in containers of one litre or more. In such a scenario, there would not be any impact on increasing the GST, as small packets of coconut oil with less than 200 ml are sold for cosmetic purposes only.
However, the source said the industry has strictly enforced the Government directive to sell edible coconut oil only in packed form and not in loose to curb adulteration. Considering this, it was not justified to increase GST as hiking of tax would make the product dearer, leading to a consumer shift. This would also hit growers mainly small and marginal hardly with the possibility of a price crash for raw coconuts.
The source also expressed the confidence that the coconut producing States such as Kerala and Tamil Nadu would oppose the move when the proposal was placed before the GST Council and go for an amicable settlement.