Kochi: Ignorance about the Goods and Services Tax (GST) on popular Kerala snacks will make bakeries and other sellers to pay additional tax based on their annual turnover.
Notices, demanding additional tax, are being sent to several sellers who have sold the snacks at a GST of five per cent instead of 12 per cent.
According to norms, several snacks sold under any particular brand, even if the packaging carries the name of the seller or establishment, invite a GST of 12 per cent. Unaware of the norms, many sellers in the State are selling snacks after realising a GST of five per cent.
The norms are application to all snacks, including 'mixture' (a variable edible mix of spicy dried ingredients, such as fried lentils, peanuts, chickpeas, chickpea flour, corn, vegetable oil, puffed rice, fried onion and curry leaves), 'murukku' (torque snack) and banana, jackfruit or tapioca chips (crisps).
Unbranded rice and wheat flour have a GST of five per cent if sold loosely (in small quantities based on the buyers' requirement). The GST, however, would increase to 12 per cent if the packaging identified the seller/establishment. Otherwise, the package should carry a disclaimer saying it is not a branded product.
Strangely, some other local snacks carry a GST of 18 per cent. The 18 per cent GST is applicable to 'vada' (snack made from ground lentils or mashed potatoes, that is deep fried in oil), 'pazham pori' (banana fritter), 'sukhiyan' (fritter made with pulses, jaggery and refined wheat flour), 'baji' (deep-fried fritter made of vegetables or meat dipped in a chickpea batter), 'samosa' (deep fried or baked snack with a spiced filling in all-purpose flour), and 'neyyappam' (a sweet rice-based fritter fried in ghee).
However, 'unniyappam' (a small, deep-fried snack made from rice, jaggery, banana, roasted coconut pieces, roasted sesame seeds, ghee and cardamom powder) has a GST of only five per cent.
The GST is fixed based on HSN (Harmonized System of Nomenclature — a six-digit, globally accepted uniform code that classifies more than 5,000 products) code. If a product does not have the HSN code, it falls under the 'unclassified' category, and a higher GST is applicable.
'Vada' and 'baji' do not have HSN code and hence 18 per cent GST is applicable.
The humble 'unniyappam', however, has a different story. The Authority for Advance Ruling (AAR) fixed a GST of five per cent on 'unniyappam' when an entrepreneur enquired about the rate.
'Neyyappam' and other local snacks are not as lucky as 'unniyappam.' Hence, a seller/bakery with an annual turnover of more than Rs 1.8 crore will have to pay a tax of 18 per cent, meaning, Rs 1.80 will be the tax component of a 'vada' that costs Rs 10.
The norm forces sellers to price the 'vada' at Rs 8.20, and sell it for Rs 10, after including the tax of Rs 1.80.
The disparity in tax can be seen in the case of ice creams also. Branded ice creams have a tax of 18 per cent, but if made locally in the bakery, it carries a tax of five per cent. But if sold in an ice-cream parlour, it will have a tax of 18 per cent. Since any dish served in a restaurant is taxed at five per cent, ice creams offered there also carry a tax of five per cent. The restaurant, however, cannot claim input tax credit.
Pizza's is a curious case, with two separate tax rates for the same dish. Its base (the bottom crust) has a GST of five per cent. The Appellate Authority for Advance Ruling (AAAR) in Haryana has fixed a GST of 12 per cent on the topping, leading to each layer of the same dish having different tax rate.