Ambiguity over GST food rates in spotlight

The managing director (MD) of a famous restaurant chain in Tamil Nadu supposedly apologising to Union Finance Minister Nirmala Sitharaman in Coimbatore on Wednesday has triggered a political controversy.

- INDIVJAL DHASMANA

Even if the political part of the incident is left aside, the development reminds one of ambiguities in goods and services tax (GST) rates for various products, particularly food items.

The MD, D Srinivasan, had told the minister at an industry event there was 5 per cent GST on sweets but 12 per cent on savouries, and 18 per cent on cream-filled buns, whereas there was no GST on buns! Customers often complain, saying, "Just give me the bun, I'll spread the cream and jam myself".

Srinivasan is also president of the Tamil Nadu Hotels Association.

Though the remark left the gathering in splits, the seriousness of the issue of ambiguity of GST rates on food products cannot be just wished away.

GST rates for goods are based on the harmonised system of nomenclature (HSN) codes. But deciding rates is not as simple as it looks. Various disputes have arisen on the placement of these products in HSN codes and schedules under them for determining the tax rates.

Coming back to the GST rates for sweets, savouries, cream-filled buns, and just buns, both sweets and savouries have the same HSN code 21069099 but they have different rates since they come under different schedules. Sweets come under schedule I, attracting a GST rate of 5 per cent, and savouries under schedule II draw 12 per cent.

HSN codes of cream-filled buns and just buns are under the same HSN code till four digits but the former as cited above draw an 18 per cent rate and the latter are exempt through a notification.