Parotas placed in 18% GST bracket
As per a recent Authority for Advance Rulings (Karnataka Bench) notification, parotas will attract 18 per cent GST, even as its siblings rotis, naans, kulchas and khakhras are under 5 per cent bracket.
Bengaluru-based iD Fresh Food, which sells on an average 8.5 parotas a day or parotas worth over ₹100 crore across the country in a year, is readying to go for an appeal questioning the rationale behind bringing parotas under a higher GST category.
P.C. Musthafa, founder and CEO of iD Fresh Food, told The Hindu, “We are of the understanding that all our products come under 5 per cent GST. As per Karnataka VAT authority notification, our products also come under 5 per cent VAT. Our partner in Mumbai got a favourable ruling from GST Council that parotas are classified under 5 per cent GST.”
“On these grounds, we are going for an appeal to the appellate body at the GST Council with a hope that this order will be reversed. I feel the AAR ruling was a result of a confusion around the category for parotas. We have to ask the authority how parotas, layered flatbread, are different from rotis,” he said.
As per iD Fresh Food CFO Jaipal, the word ‘parota’ is missing in the GST law and that’s why his company had sought a tax category clarification from the AAR.
“We know we are paying the right GST at 5 per cent. But since parota was not mentioned in the rule book, we had applied for an AAR notification to make things clear. How can the authority put basic, simple, staple food under a high tax category; also how can GST go higher than VAT itself, we wonder,” said Jaipal.
Recently, one of the suppliers of ready-to-cook foods, Signature International Foods India, received a favourable, 5 per cent GST, ruling from Mumbai GST Council.
According to industry sources, the country’s ready to cook parota segment is close to ₹500 crore industry annually. In the organised sector, iD is the single largest national player, while there are dozens of small and local players across the country. Again, in the frozen parota category, there are several players, including big names like Godrej Foods, Sumeru Foods, Haldirams and others.