Unbranded namkeen products to attract 12% GST, not 5%, rules Gujarat AAR

New Delhi, February 10, 2023 

One of the first rulings after the rate-change came into effect from July 18 last year

Unbranded salted snacks, or namkeens and related products, such as potato chips, bhujiya and gathiya, would suffer 12 per cent goods and services tax (GST), not five per cent, ruled the Gujarat authority for advance rulings (AAR).

One Prjajapati Keval Dineshbhai, who intended to make such snacks, submitted before the AAR that the products are unbranded and hence should be taxed at five per cent.

The GST rate for various products is set on the basis of the harmonised system nomenclature (HSN) code. The applicant said that namkeens fall under the code 210690 and hence would draw the five per cent GST.

The AAR observed that the term “namkeen” isn't defined under the CGST Act. Further, the applicant intends to supply the food products in packages, so they would be considered as pre-packaged and labelled.

As such, the products would suffer a 12 per cent tax rate following a notification by the finance ministry last year.

The notification had amended the rates on July 18 last year and excluded pre-packaged and labelled products from the levy of five per cent GST, following a decision to this effect by the GST Council.

The said products would attract a 12 per cent rate since.

This is one of the first rulings after the GST rates on labelled and prepacked food products were amended in compliance with the FinMin notification.

"The requirement of labelling also assumes significance in deciding the classification of the product. Hence, the judgement of Gujarat AAR is in line with the notification which introduced the requirement that not only the branded products but the labelled products as well under the Legal Metrology Act would be subject to 12 per cent GST," sad Sandeep Sehgal, partner tax at AKM Global.

[The Business Standard]