“If you want to make everyone happy, don’t be a leader, sell ice cream”. This famous quote by Apple’s late co-founder and CEO Steve Jobs was originally about leadership, but it was invoked by the Indian Ice-cream Manufacturers’ Association (IICMA) during its meeting with Finance Minister Nirmala Sitharaman to press for a reduction in the Goods & Services Tax (GST) on ice cream.
Currently, ice cream attracts 18 per cent GST, while the IICMA is requesting that it be lowered to 5 per cent. In its submission, the association argued that since Indian milk sweets are taxed at 5 per cent and flavoured milk at 5 or 12 per cent, ice cream should not be taxed differently.
“The formulation of flavoured milk and ice cream is quite similar. The major ingredients are fat, milk solids-not-fat (SNF), and sugar. The only difference is in the physical state — liquid in the case of flavoured milk and frozen in the case of ice cream,” IICMA, led by Sudhir Shah, said in a representation submitted to the Finance Minister.
Based on the recommendation of the GST Council in its meeting held on September 17, 2021, the Central Board of Indirect Taxes and Customs (CBIC) clarified that ice cream sold by a parlour or any similar outlet would attract GST at the rate of 18 per cent. The industry estimates the total GST collection on ice creams to be around ₹3,600 crore.
“The reduction of GST from 18 per cent to 5 per cent may lead to an exchequer loss of about ₹2,600 crore,” the association said.
“We submit that this will also lead to an increase in the consumption of ice cream, and the overall loss to the exchequer may be minimal. We further submit that this will also minimise GST evasion on ice creams,” it argued.
According to the association, a common misconception persists that ice cream is a luxury product. “We most respectfully submit that over 80 per cent of ice cream consumed in India is priced at less than ₹30 per serving. In fact, there are several products priced in the range of ₹5 to ₹10. The ice cream industry has ensured that the product is available even in the remotest parts of the country,” it said.
Further, the luxury image is based on niche outlets and premium parlours, which account for a very small fraction of total sales volumes. These parlours do not charge for the ice creams alone but for the overall ambience and experience.
It argued that ice cream is a nutritious product that provides essential nutrients like protein, fat, and energy, and plays an important role in addressing malnutrition. For growing children and undernourished populations, it can serve as an accessible source of proteins, fats, and calories.
“We submit that ice cream should not be seen merely as a treat, but also as a supplementary nutritional food. A lower GST rate would encourage wider consumption and support public health objectives,” the association said.
Connecting the consumption of ice cream to happiness, the association concluded its case by stating, “A reduced tax rate can help promote emotional well-being and upliftment, especially during extreme weather conditions when ice cream is most in demand.”
Source from: https://www.thehindubusinessline.com/economy/ice-cream-makers-invoke-steve-jobs-to-seek-gst-cut/article69455912.ece
