FCI allows millers to deliver custom-milled rice, but GST, godown issues remain

In a major relief to rice millers, the Food Corporation of India (FCI) has granted permission to deliver custom-milled rice (CMR), but still unresolved issues regarding the allocation of godowns for delivery and the Goods and Services Tax (GST) on fortified rice kernels (FRK) continue to be major hurdles, leaving millers hesitant to proceed.

“The FCI has allowed the millers to deliver the CMR. All the procurement agencies have almost completed the physical verification and the team members are likely to submit a report by Monday to DC for starting the delivery,” said Anil Kumar, DFSC, Karnal.

Reduce GST from 18% to 5%

We purchase fortified rice kernels at Rs 5,000 per quintal plus 18 per cent GST, but only 5 per cent of the total GST is reimbursed. The government should fix charging of 5 per cent GST, as was done last year. -- Saurabh Gupta, president, Karnal Rice Millers and Dealers' Association.

Rice millers welcomed the permission given by the FCI, but stressed that deliveries could not begin until two major issues are addressed -- disparity in GST charges on FRK and non-allocation of godowns for delivery of rice. They alleged that manufacturers charge 18 per cent GST on FRK, while the government reimburses only 5 per cent to millers, creating a financial burden.

“We have been allowed to deliver the rice, but still we are facing two major issues. We purchase FRK at Rs 5,000 per quintal plus 18 per cent GST, but only 5 percent GST is reimbursed. The government should fix charging of 5 per cent GST, as was done last year,” said Saurabh Gupta, president of the Karnal Rice Millers and Dealers' Association.

He said another issue was of the non-allocation of godowns for delivery. “We demand the FCI should link godowns to mills in nearby areas to facilitate timely delivery and reduce transportation costs,” said Gupta.

However, DFSC Anil Kumar said their both issues were being discussed and likely to be resolved soon.

As per the CMR policy, the millers have to deliver 25 per cent of the total rice to FCI by the end of December, further 20 per cent by the end of January, 15 per cent in February, and further 25 per cent in March and the remaining by April-end. The paddy procurement was completed by November 15, but after one month, millers are not able to deliver the rice, said Gupta.