GST hike on coconut oil from 5% to 18% has Kerala fuming

At the 45th GST Council meeting, the Fitment Committee of GST recommended an 18% GST on coconut oil sold in unit containers of less than one litre and a 5% GST on units sold in containers of one litre or more. Coconut oil price is likely to skyrocket and merchants, traders as well as producer are up in arms over this move.

Kerala will oppose the move to increase the tax on coconut oil as it will affect the interests of the people of the state, official sources said. State Finance Minister K N Balagopal, will raise the matter in the meeting to be chaired by Union Finance Minister Nirmala Sitharaman. 

A hike in the tax on coconut oil will pave the way for the rise in prices of coconut oil, which is the major edible oil item in Kerala and parts of Tamil Nadu and Karnataka.

The Solvent Extractors’ Association (SEA) of India has said that the proposed changes to the GST rate for classification of edible coconut oil will be detrimental to the interests of coconut farmers and industry.

In a letter to the Union Finance Minister, the SEA President, Atul Chaturvedi, said that at present pure edible coconut oil is taxable at the rate of 5 per cent. “It is understood from the reports that there is a proposal to enhance the rate of tax from 5 per cent to 18 per cent on coconut oil sold in packs below 1000 ml, and the rate would continue to be 5 per cent on coconut oil sold in the packs above 1000 ml,” he said. The proposed changes in GST for packaged coconut oil shall adversely impact not only the industry, but other stakeholders such as farmers and consumers, he said.

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