Vegetable Oil Makers May Soon Get GST Refunds; Decision Awaited

The ban on tax refunds for vegetable oil may be lifted, with a decision expected at the GST Council meeting. Food Secretary Sanjeev Chopra stated that the Food Ministry has forwarded the vegetable oil industry's request to the Finance Ministry. The edible oil sector has been dealing with restrictions on Goods and Services Tax (GST) refunds for input tax credits (ITC) under the inverted duty structure since July 2022.

This has especially impacted small and medium-sized enterprises as well as domestic manufacturers. A 5 percent GST is applied to edible oils, while input materials like packaging, chemicals, and processing equipment are taxed at a higher rate of 12-18 percent. Due to this discrepancy, the industry was permitted to claim refunds on ITC until 2021-22.

Additionally, all vegetable oil producers will need to register with the Directorate of Sugar and Vegetable Oil. They must submit monthly reports on production, sales, stock levels, and purchases by the 15th of each month. These rules aim to prevent hoarding and stabilize prices. The ministry plans to hold awareness camps with industry stakeholders at key locations to help facilitate on-the-spot registration within a few months.