Packaged food products sold under names that are yet to receive trademark confirmation could attract a goods and services tax (GST) rate of 5 per cent, ending the exemption they enjoy now.
The GST Council is likely to treat brands for which a company has already made an application for a trademark akin to a branded product to plug misuse of the provision by companies to stay exempt.
The government will likely take up the issue at the next GST Council meet on September 9.
Besides, the definition under the earlier central excise regime could be incorporated in the new tax. Under this definition, ’brand name’ or ’trade name’ means just that, whether registered or not, and goes on to detail what constitutes either.
The exemption was allowed following concerns raised by some state governments that including packaged food with logos could cover smaller traders who sell their own packaged food articles, hurting their business.
This practice is also followed by large retail chains that sell in-house packaged products without registered trademarks and are claiming exemption from GST.
State and central government officials taking another look at the norms are now thinking of putting in place a stringent framework after reports that some leading companies were passing off hitherto established brands as unregistered trademarks to claim exempt status.