Finance ministry sources clarifies why parotas attracts 18 per cent GST
Jun 13, 2020
New Delhi [India], June 13 : Frozen (and preserved) wheat parota and malabarparota which are sold in ambient and frozen form with a shelf life of three to seven days is not a plain roti but a distinct product and shall attract 18 per cent GST, clarified Government sources in the Finance Ministry.
"It may be noted that frozen parota is preserved, sealed packed, branded and is usually sold at higher prices. It is not a staple item and is consumed by the class which could afford to pay taxes. Even items like cheaper biscuits, pastries, cakes, attract GST at the rate of 18 per cent. Frozen foods can not be comparable to plain roti or plain parota served in restaurants or taken as staple food, or eaten by poor on a day-to-day basis and hence shall attract 18 per cent GST," sources told ANI.
Recently Authority of Advance Ruling (Karnataka Bench) in its order said that parotas are not rotis and it attracts 18 per cent GST. A company of frozen food went to AAR against a GST ruling.
Sources said, "This is a standard worldwide practise where processed or packaged food are taxed at a higher rate. For example, milk is tax-free, but tetra-packed milk is taxed at 5 per cent and condensed milk is taxed at 12 per cent."
"The FMCG companies such as Nestle, Hindustan Lever, Coca-Cola, Pepsi etc make significant profits on the sale of packaged food items by selling them at higher rates. These items are largely consumed by those who are economically better. That is why the world over such items are taxed at higher rates," sources added.
Sources further said that plain roti or parota served in a restaurant or provided in takeaway get the same treatment in rates and attract 5 per cent GST only.
"Plain roti or parota is not a frozen product. 'Parota' which is sold under a brand and in a sealed cover with a shelf life. Hence, such frozen and preserved parota is not like plain roti, khakra, etc. Also, this order does not decide the rate of ordinary plain parota. The ordinary or any parota, served for consumption by a restaurant, or a takeaway, would attract 5 per cent GST rate just like plain roti," sources said.
The rate of frozen and preserved parota was earlier discussed about the in the GST Council (the 37th meeting). The Council did not recommend to reduce GST rate on frozen and preserved parota for the reasoning that these parota are sold by organised sector.
