Taste-bud ticklers dosa and idli may turn out a tad sour on the palate after a recent Tamil Nadu tax ruling.
The authority for advance rulings (AAR) in the state has said that henceforth branded ready-to-cook dosa, idli and porridge mixes will attract 18 per cent GST.
The AAR said the products in question were all food preparations in the form of powder. “The dosa and idli mixes are packed and sold as mixes which are to be mixed with water/boiled water/curd to make them as batter and the product sold is a powder and not batter,” the AAR said while making it clear that these will attract GST at the rate of 18 per cent and not 5 per cent.
“The AAR ruled that branded ready-to-cook products such as dosa mixes, idli mix would be taxable at 18 per cent GST, instead of 5 per cent that is chargeable on batter used to cook dosa and idli. The ruling would lead to a legal anomaly wherein an intermediate product would become dearer than other available alternatives to cook dosa and idli,” Rajat Mohan, senior partner with AMRG, said
“The authority has created a divide between ready-to-cook mixes and the wet batter. The rulings have a solid persuasive value for the entire industry, making branded ready-to-cook products dearer compared to other alternatives,” he said.
Abhishek Jain, tax partner, EY, says “Such rulings may create an ambiguous situation in the taxing system where the same product when sold in the form of flour attracts higher tax rate in comparison to when it is sold as batter.”