Baby food products containing ingredients other than milk as well may be charged 18 per cent goods and services tax (GST) instead of five per cent applicable to milk products if a judgement by the Rajasthan authority for advance rulings (AAR) sets a precedent.
The AAR gave the ruling on an application submitted by Jaipur-based Bebymil for clarification on the GST rate for its products—milk food for babies and milk for babies—sold under the trade name Momylac.
The authority observed that the primary product manufactured by the company is infant milk formula which includes cereals and protein supplements and works as a substitute for mother’s milk.
The GST rate for goods depends on their harmonised system of nomenclature (HSN) codes.
In this case, the authority observed that the products are classified under HSN 1901 which covers products where milk is one of the ingredients rather than HSN 0402 which pertains solely to milk products, said Sandeep Sehgal, partner at tax and consulting firm AKM Global, explaining the case.
GST at the rate of 18 per cent is imposed on HSN 1901, AAR said.
It should be noted that the GST at the rate of five per cent is applicable to products under HSN 0402, Sehgal said.
Sehgal said the ingredient level in any product is a significant factor for determining the right classification for that product and hence the GST rate applicable to that product.
First Published: Jun 06 2024 | 6:56 PM IST
