To Attract 18% GST, Ready to Cook Idli-Dosa Batter Sold in Powder Form in Tamil Nadu

If you love South Indian food then here is some important news for you. Ready-to-cook Idli, Dosa, porridge mix, etc, sold in powdered form are taxable at 18%, even though the GST rate is 5% if they are sold as a batter.

Krishna Bhavan Foods and Sweets had reached the TN bench of the Authority for Advance Ruling or AAR seeking a ruling on GST (Goods and Services Tax) rate applicable on 49 products such as bajra, jowar, ragi & multigrain porridge mix that are sold under a brand name.

The Authority for Advance Ruling found that the products by the entity are all food preparations in the form of powder. AAR ruled that ‘The Dosai Mixes & Idli Mixes are packed & sold mixes, which are to be mixed with the water/boiled water or curd to make it as batter & the product sold is a powder & not batter. All the 49 products for which the applicable rate is 9% CGST& 9% SGST’. 

AMRG & Associates Senior Partner Rajat Mohan said the AAR held that ready-to-cook products such as dosa mixes, idli mix, sold in the name of a brand name that is taxable at 18% GST, even though batter for the same is taxable at 5%.

‘This kind of legal interpretation by authority for the advance ruling would lead to an inverted duty structure for the entire industry, posing them to file the tax refunds on regular basis’ said the Associates Senior Partner Rajat Mohan. 

Abhishek Jain, EY Tax Partner said that such rulings may create an ambiguous situation in taxing system where same product when sold in the form of a flour attracts the higher tax rate in comparison to when it is sold as a batter.

EY Tax Partner, Abhishek Jain said that the ‘government should come up with a suitable clarifications or amendments in the law to resolve such discrepant circumstances.