Are parathas different from rotis under Goods and Services Tax (GST) laws? According to a ruling by the Karnataka bench of the Authority for Advance Rulings, parathas are not rotis and therefore can be taxed at a higher GST rate of 18 per cent compared to 5 per cent for rotis. A Bengaluru-based food manufacturer had sought clarity on whether parathas can be classified in the same category as khakhara, plain chapati or roti, which would mean lower tax.
In its ruling, the Authority of Advance Rulings distinguished between parathas and rotis, holding that parathas will continue to be taxed at the rate of 18 per cent under the indirect tax regime.
ID Fresh Food, a manufacturer of ready-to-cook food products, had demanded a ruling on whether its products such as Malabar parathas and whole-wheat parathas fall under the same category as roti, which draws a GST rate of 5 per cent. The company supplies the two products – which have a shelf life of 3-7 days – to distributors, retailers and other operators in the food services segment within the country as well as overseas.
The company contends that its products should be treated in the same way as khakhra, plain chapati or roti under the law.
According to the authority, khakra, plain chapatti or roti are prepared or completely-cooked products, so they fall in the category of ready-to-use food products under the Customs Tariff Act, 1975. But parathas need to be heated before consumption and cannot be placed in the same category, said the AAR.
“The products roti and chapati are of mass consumption and therefore a lower GST rate of 5 per cent is notified in Entry 99A (rate notification under GST law) with expressions ‘khakhra, plain chapati or roti’. The Authority has distinguished the Paratha from roti due to difference in the applicable GST rates,” said Sunil Kumar, deputy general manager-R&D at Taxmann.
Founded in 2005, ID Fresh Food makes a range of ready-to-cook products such as chapati, vada, idly and dosa batter and filter coffee, according to its website.