18% GST on Parota, 5% on Rotis: Karnataka Tax Authorities' New Ruling Explains the Difference

New Delhi: In a recent GST ruling, Authority for Advance Rulings (Karnataka bench) distinguished between the two, holding that parotas would be subject to a higher GST rate of 18 percent.

According to a report by The Times of India, AAR differed from the view of the applicant, a private food manufacturing company based in Whitefield, that parotas should be classified under the product description of 'Khakhara, plain chapati or roti' (or to be more technical, under heading 1905). Owing to Entry 99A, of Schedule 1 to GST notifications, rotis are subject to a lower rate of 5 per cent.

ID Fresh Food, which was engaged in preparation and supply of a wide range of ready-to-cook meals and fresh foods, such as idli and dosa batter, parotas, curd and paneer, had approached AAR to seek a ruling on the GST rate applicable to whole-wheat parotas and Malabar parotas.

In its order, AAR states: The products under heading 1905 (rotis) are already prepared or completely cooked products, they are ready-to-use food preparations. On the other hand, parotas need to be heated before consumption. On this ground, AAR held that parotas do not merit classification under heading 1905 and are not covered by Entry 99A.

Amid the outrage, government sources said it must 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, etc., attract GST at the rate of 18%. Frozen food would be more comparable to such item. Frozen foods cannot be comparable to plain roti or plain parota served in restaurants or taken as staple food, or eaten by poor on day-to-day basis,” they said.

They added, “It is important to note that plain roti or parota served in a restaurant or provided in takeaway get same treatment in rates and attract 5% GST only.”

The government also said it was standard worldwide practice “where processed or packaged foods are taxed at a higher rate”.