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Your Frozen Parathas Just Got Deep Fried!

The debate on the goods and service tax rates on roti or paratha refuses to subside.

The Gujarat Authority on Advance Rulings has said GST at 18% is chargeable on paratha, instead of 5% as applicable on roti, chapatti or khakra.

According to the authority, paratha does not fall under the category of roti, chapatti or khakra as it is not mentioned in the harmonized system of nomenclature code, commonly called HSN code that is used to classify products and apply tax rates. It has gone a step ahead and delved into the ingredients of a paratha and said that paratha, in the particular case, was a ready-to-cook product and not ready-to-eat.

“The composition of paratha (wheat flour 36% to 62%) is different from the composition of khakra/ plain chapatti/ roti Moreover, ‘paratha’ also requires further processing for human consumption as admitted by the applicant themselves,” the order issued on Tuesday said.

“Varieties of parathas supplied are not ‘ready to eat food preparations’ or ‘products ready for consumption’, but are products on which some ‘cooking process’ needs to be carried out to make them ‘ready for consumption’, i.e., they need to be heated on a pre-heated pan or a griddle,” the authority said, explaining its reasoning behind the decision.

“The ruling is differentiating between roti and paratha and also introducing a criterion of ready-to-cook vs ready-to-eat eatables which may create ambiguity leading to disputes and litigations,” said Abhishek Jain, tax partner at EY.

Paratha is not a defined product under GST, which is why companies making ready-to-cook parathas have approached AARs seeking that the paratha should be put in the same category as roti, and be taxed at 5%.

AARs however, have said otherwise and have put the product in the 18% rate slab. The Karnataka AARs had issued an order to the effect last year, following which a furor erupted on social media with questions on why should there be two tax rates on seemingly similar food items.

While the government did not clarify the issue, officials had said frozen parota would be taxed at 18% while plain parota that was served for consumption by a restaurant, or a takeaway, would attract a 5% GST rate, just like the plain roti. S-ET

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