Gujarat authority justifies 18% GST on paratha vs 5% on khakhra and chapati, here’s the logic behind it

The goods and services tax (GST) came into effect more than five years back, as one unified tax to replace several levies in India. Deemed successful after collections of more than Rs 1 lakh crore a month since October 2020, GST was meant to simplify business across sectors. But it has also been causing confusion in some cases, such as the difference of GST rates applicable on the humble chapati and its more wholesome cousin, the paratha.

Khakhra and paratha, distant cousins but not the same

In the latest verdict in the matter, the Appellate Authority for Advanced Ruling (AAAR) in Gujarat has said that consumers must pay 18 per cent GST on frozen parathas, as compared to 5 per cent on chapati. In response to an appeal filed by Ahmedabad-based Vadilal Industries, the Gujarat AAAR clearly mentioned the distinction between chapati or khakhra and paratha. Its rationale behind the decision is that a frozen paratha needs to be cooked for 3-4 minutes before it turns brown and can be consumed, while roti and khakhra don’t require any cooking.

The appellate body also cited the composition of paratha, which requires oil, flour, water and in some cases vegetables or methi. On the other hand chapatis just require water and flour, which is why they attract a lower GST. This contradicts the claim by paratha manufacturers that both chapati and paratha are made from the same principal ingredient, whole wheat flour.

Maharashtra and Gujarat’s tastes differ

Vadilal in its argument cited Maharashtra AAR’s 2018 order, where it mentioned that paratha, roti and plain chapati are all covered by Entry No 99 A of Schedule I, and should attract only 5 per cent GST. Maharashtra government’s GST portal applies 5 per cent GST on roti, khakhra and chapati, while it doesn’t mention paratha separately.

Kejriwal savours political opportunity

Delhi CM and Aam Aadmi Party leader Arvind Kejriwal, who is amping up his campaign in Gujarat, has slammed the decision by saying that even the British weren’t taxing food like the BJP government. He had earlier attacked the Gujarat state government for imposing an 18 per cent GST on garba events during Navratri. In 2020, ID was also hit by a similar ruling when Karnataka AAAR said that its frozen Malabar parotta should attract 18 per cent GST.

But the paratha and chapati aren’t the only similar food items pitched against each other over GST.

Ready to eat idly, dosa and porridge were placed under the 18 per cent GST slab, while only 5 per cent is applicable on batters for the same.

Fryums which are ready to consume attract 18 per cent GST, while the rate is 5 per cent for unfried papad and puri papad.

Coconut oil is taxed 5 per cent as GST, while hair oil GST rates are 18 per cent, that creates confusion in case of coconut oil for hair.

These are just some of the complications arising from the implementation of GST as well as changes made in rates since it was launched. Smaller e-commerce players have also been troubled due to the complicated process of registering for the tax meant to simplify operations.