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Insider Insights: Flour Mixes & Additives Tax Clarified!

editor — Sat, 08 Jun 2024 08:01:04 +0000

The Gujarat Appellate Authority for Advance Ruling has made it clear that flour mixes containing additives will attract an 18% Goods and Services Tax (GST) as they are considered as food preparations not specified for a lower tax rate in the law.

This decision was prompted by an application submitted by a company in Gandhinagar that sells flour mixes for various dishes like idli, dhokla, and dahi vada. The company argued that these mixes should fall under a category eligible for a 5% tax rate.

However, the authority, in its order issued on 29th May, stated that flour mixes with spices and other ingredients in unspecified proportions cannot claim the lower tax rate. This ruling upheld a previous advance ruling given by the Gujarat Advance Ruling Authority.

Referring to a 2018 revenue department order, the Authority highlighted that mixtures of flour made from ground pulses and cereals, including those with “very small amounts of additives”, are taxed at either zero or 5%. If unbranded, they are exempt from GST, and if branded and packed, they attract a 5% tax. Nevertheless, mixes with additives in unspecified proportions do not qualify for the lower rate.

The appellate authority emphasized that only flour mixes containing “very small quantities of specified substances” are eligible for the lower tax rate. In the case in question, the additives ranged from 5-27%.

Advance rulings enable companies to seek clarity on tax matters from the authorities, thereby helping to avoid legal disputes and ensuring certainty regarding their tax obligations.

Experts noted that the classification of products and services often leads to disputes. “Classification disputes are one of the most common areas of litigation under GST. Despite the issuance of circulars, differing interpretations of the clarifications provided in these circulars have often posed challenges,” one expert remarked.

Source: https://www.livemint.com/news/flour-mixes-with-additives-attract-18-gst-clarifies-gujarat-appellate-authority-11717764752547.html

Maharashtra: The Leading State in GST Contribution at 19.6% and Per Capita Consumption Spending

editor — Sat, 13 Apr 2024 05:10:13 +0000

In the realm of GST collection, Maharashtra emerges as the primary player, contributing 19.6% to the national pool in the fiscal year 2024 (April-February), solidifying its status as a significant economic force in India. According to the latest data on state-wise collections, Maharashtra takes the lead, followed by Karnataka as the second-largest contributor to the GST pool, as highlighted in a Crisil report released on April 11.

The Crisil report, titled Quickonomics, underscores Maharashtra’s dominance not only in absolute GST collection figures but also in per capita terms. When adjusted for population size, Maharashtra secures the top spot, indicating robust consumption spending within the state.

Drawing a comparison with states of lower income, the analysis by Crisil delineates the top three states exhibiting the highest per capita consumption spending: Maharashtra, Karnataka, and Haryana. Conversely, states such as Bihar, Uttar Pradesh, and Jharkhand occupy the bottom ranks in per capita consumption spending.

Furthermore, when analyzed on a per capita basis, states like Uttar Pradesh, West Bengal, and Rajasthan witness a downward shift in rankings, signifying relatively lower per capita consumption spending despite their substantial absolute GST collections. Conversely, states like Haryana, Telangana, Kerala, and Punjab show an upward trajectory in per capita spending, indicating higher average consumption expenditure per individual.

The report also underscores the correlation between per capita income and average consumption, noting that states with higher per capita income, such as Telangana, tend to exhibit higher average consumption levels compared to states with lower per capita income, like Bihar.

Despite significant disparities in per capita income between states like Telangana and Bihar, their average GST collection growth rates over the past five years (fiscal 2020 to fiscal 2024) remain relatively similar. Telangana records a growth rate of 14.7%, while Bihar’s figure stands at 15.6%.

Source: https://www.livemint.com/economy/this-state-is-the-biggest-contributor-to-gst-collection-at-19-6-leads-per-capita-consumption-spend-11712894051524.html