GST regime, which was rolled out from July 1, may hurt the profitability of branded basmati rice companies in some states. A 5% tax has been imposed under GST on branded basmati rice while the tax rate for unbranded basmati rice has been kept at 0%. Earlier, basmati rice was subject to value-added-tax in some states and tax free in the rest. Imposition of GST is likely to put branded players in a somewhat disadvantageous position compared to the unbranded rice segment as it would further widen the pricing gap. The change in tax rate will be accompanied with competition from the non branded sector which will result in shift of demand from branded to non-branded basmati.