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Home / News / India /  Ready-to-eat parottas to attract 5% GST, says finance ministry

NEW DELHI: For people who like fresh parottas or paranthas there is some good news. According to the finance ministry, these when served in a restaurant or sold as ready to eat, without the need to heat or cook, will attract a 5% Goods and Services Tax (GST) and not 18% as feared by many who took to social media earlier this week after a tax ruling on branded and processed food.

Rotis, paranthas or parottas sold ready to eat are distinct from the preserved, frozen, packaged and the branded products which are sold at a higher price and consumed by the economically better off, explained a government official.

"Frozen food items are not comparable to plain roti or plain parotta served in restaurants or taken as staple food, or eaten by poor on day-to-day basis," said the official, adding that ready to eat items attract only 5%, while the preserved and branded ones are bought by those who could afford to pay taxes. "Even items like cheaper biscuits, pastries, cakes, etc., attract GST at the rate of 18%," said the official, who spoke on condition of anonymity.

The finance ministry’s explanation comes after many people took to social media suggesting that paranthas will be taxed at a higher rate than rotis.

The Authority for Advance Ruling, Karnataka, had held that frozen (and preserved) wheat parotta and Malabar parotta 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% GST. The key differentiator of such items compared to staple food is their being processed food.

Plain roti and parotta served in a restaurant or provided in takeaway will attract only 5% GST, unlike a frozen product sold under a brand and in sealed cover with a shelf life, said the official quoted above. "Hence, such frozen and preserved parotta (or parantha) is not a like product when compared to plain roti, khakra, etc. Also, this AAR order does not decide the rate of ordinary plain parotta. The ordinary or any parotta, served for consumption by a restaurant, or a take away, would attract 5% GST rate just like plain roti."

Taxing frozen food items at a higher rate is a global practice. "For example, milk is tax free, but tetra-packed milk is taxed at 5% and condensed milk is taxed at 12%. Fast moving consumer goods companies make significant profits on 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 world over such items are taxed at a higher rates," the official added.

Taxation on frozen and preserved parotta was discussed in the GST Council but it did not recommend a rate cut as these are sold by organised sector.

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