CBIC Notifies FAQs on GST Applicability on ‘Pre-Packaged and Labelled’ Goods

On 17th July, the CBIC issued FAQs clarifying the GST applicability on pre-packaged and labelled goods. The said changes were introduced following the recommendations of the GST Council in its 47th meeting. The recommendations have come into effect from 18th July 2022. 

The FAQs clarified that  all pre-packaged items containing a quantity up to 25 Kg (or 25 litre), will attract 5 per cent GST. However, items, which are pre-packaged above 25 Kg, in a single packet will be exempt from GST.

The FAQs also addressed if GST would be applicable to a package containing multiple retail packages. The clarification stated that if several packages intended for retail sale to the ultimate consumer are sold in a larger pack, then GST would apply to such supply. Such a package may be sold by a manufacturer through a distributor.

Further, packaged commodities supplied for consumption by industrial consumers or institutional consumers are excluded from the purview of the Legal Metrology Act. Therefore, no GST will be attracted to in such instances.
However, if a manufacturer is supplying to a distributor, dealer and to the retailer then GST will be applicable to it but the manufacturer/wholesaler/retailer would be entitled to input tax credit on GST charged by their supplier in accordance with the Input Tax Credit provisions in GST.