Should frozen parathas be taxed at the same GST rate as rotis and chapatis? Industries in this business believe that the rate should not be higher as both food items have the same core ingredient —whole grains. However, Advance Ruling (AAAR) upholds the relevant AAR order based on an application filed by Vadilal Industries. After more than 20 months of struggle, Vadilal producers were told that packaged parathas are subject to 18% GST, while chapatis are subject to a 5% tax rate.
Debate Regarding GST Difference Between Parathas And Chapatis
The debate between roti and packaged parathas is just one of many other food-related GST debates. However, on September 15, Gujarat’s Appellate Authority for Advance Rulings (GAAAR) made a clear distinction between packaged/frozen parathas and rotis.
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Vadilal claimed that it produces eight types of paratha, including Malabar, mixed vegetables, etc. And the main ingredient of all the parathas is wheat flour. Therefore, they should all draw the same GST rate as the chapati. According to the company, other ingredients such as vegetables, onions, or methi are added only for flavour and aroma. Other than that, the essential ingredients are the same for all parathas. They also said that the pizza bread draws 5% GST. But it needs to be heated and cooked before eating.
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The Appellate Authority for Advance Ruling Disagrees
However, the appellate authority’s order states that such packaged parathas need to be cooked for 3-4 minutes until golden brown on both sides. While chapattis are primarily made from wheat flour, the packaged parathas sold by the company contain other ingredients. It includes vegetable oil, salt, potatoes, and cauliflower, depending on the type. Whereas chapatis are made quickly and mainly use flour products.
Hence, the appellate authority stated that parathas and chapatis are not the same and the former must draw 18% GST.
Source: Business Standard
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