Fresh parota at restaurant attracts 5% GST, tax rate jumps to 18% if sold frozen

Plain rotis or parotas (types of Indian flatbreads) is treated as a staple diet of common people and attract 5% tax, but they will attract an 18% levy if sold in the frozen form, a senior government official said.

“Plain roti or parota served in a restaurant or provided in takeaway get same treatment in [tax] rates and attract 5% GST [Goods and Services Tax] only,” the person said requesting anonymity.

He was commenting on a decision by Authority for Advance Ruling (AAR), Karnataka that frozen and preserved wheat parotas and malabar parotas with a shelf life of three to seven days are not plain ‘rotis’ but a distinct product that would attract 18% GST.

The finance ministry declined comments on this matter.

The official said frozen parota is preserved, sealed packed and branded. It is sold at a premium and it is not a staple item. It is consumed by the affluent class that could afford to pay tax.

“Even items like cheaper biscuits, pastries, cakes, etc., also attract GST at the rate of 18%. Frozen food would be more comparable to such item. Frozen foods cannot be comparable to plain roti or plain parota served in restaurants or taken as staple food, or eaten by poor on day-to-day basis,” the official said.

The AAR ruling is area and product specific. A poor person staple food like plain roti cannot be treated at par with a packed product or a frozen parota, he said.

This order does not decide the tax rate of ordinary plain parota. “The ordinary or any parota, served for consumption by a restaurant, or a take away, would attract 5% GST rate just like plain roti,” he added.

“The AAR (Karnataka) held that such frozen and preserved parota would not be entitled to concessional rate as available to roti (plain roti, khakra attracts 5% GST rate). It has been held that frozen and preserved parota would attract GST at the rate of 18%,” he said.

The matter was earlier discussed in the 37th meeting of the GST Council. The Council did not recommend to reduce GST rate on “frozen” and “preserved” parota for the reasoning that these parota are sold by organised sector, he added.