No GST on fortified toned milk, but treated tamarind kernel powder to attract 5% tax

Finance Ministry issues circulars to clear doubts on tax applicability


Fortified toned milk and supply of drinking water not in sealed containers are exempt from Goods and Services Tax (GST). But treated tamarind kernel powder attracts 5 per cent GST.

The three product categories are part of a list of 11 for which the Finance Ministry has tried to clear doubts over the applicability of GST rates.

Other product category in the list include sugar (processed from cane and beet), plasma products, wipes using spun lace non-woven fabric and quilt along with comforter. In two other circulars, the Ministry has issued clarifications on applicability of GST on products related to fertiliser and oil refinery industries.

A senior Finance Ministry official hoped that all three circulars will not just help in bringing down the number of litigations but also help in promoting ‘Make in India.’

Echoing the same sentiment, Abhishek Jain, Tax Partner at EY, said the rate clarifications should address the rate ambiguities faced by some major industries like automotive, fertilizers, oil refineries, etc and also aid in bringing uniformity in the rates charged by various players. “Today, various players have been charging different rates basis their interpretation of the law with this in some cases also affecting their market competitiveness,” he said.

Household products

According to the circular, fresh milk and pasteurised milk, including separated milk, milk and cream, not concentrated nor containing added sugar or other sweetening matter, excluding Ultra High Temperature (UHT) milk, attracts ‘nil’ rate of GST. Further, milk enriched with vitamins and minerals is classifiable under same product category, hence, it is clarified that “toned milk fortified (with vitamins ‘A’ and ‘D’) attracts ‘nil’ rate of GST.

Doubts have been raised regarding GST rate applicable on refined beet and cane sugar. It was because one particular notification (No. 1/2017-Central Tax (Rate) dated June 28, 2017) mentioned GST rate of 12 per cent for refined sugar containing added flavouring or colouring matter and sugar cubes (other than those which attract 5 per cent or ‘nil’ GST). This created confusion after which the Ministry clarified that beet and cane sugar, including refined ones, will attract 5 per cent GST rate.

Regarding tamarind kernel powder, the Ministry said though 5 per cent GST rate was prescribed on tamarind kernel powder, the notification did no mention the word, ‘modified’ specifically, raising doubt on GST rate for chemically treated (modified) form (cold, water soluble) of such powder. Now, the Ministry has clarified that all form of tamarind kernel powder will attract 5 per cent GST.

Clarity was also required on GST applicability on baby wipes and quilt. The Ministry said wipes of various kinds are classifiable under various categories depending upon their constituents. Accordingly, if the baby wipes are impregnated with perfumes or cosmetics, then they would attract 18 per cent GST rate. Similarly, if they are coated with soap or detergent, then rate would be 18 per cent.

Rate on quilts

For quilt, there are two rates — 5 per cent for cotton quilts with maximum retail prices not exceeding 1,000 and 12 per cent for others. Doubt was raised as to what constituted cotton quilt, i.e. whether a quilt filled with cotton with cover of cotton, or filled with cotton but cover made of some other material, or filled with material other than cotton. The Ministry said, “The essential character of the cotton quilt is imparted by the filling material. Therefore, a quilt filled with cotton constitutes a cotton quilt, irrespective of the material of the cover of the quilt. The GST rate would accordingly apply.”


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