The Rajasthan Authority for Advance Rulings (AAR) has determined that baby food products containing ingredients other than milk may be subject to an 18 percent Goods and Services Tax (GST). This contrasts with the 5 percent GST rate that applies to milk products. This ruling, which could set a precedent, came in response to an application from Bebymil, a Jaipur-based company, seeking clarification on the GST rate for its products sold under the brand name Momylac.
Bebymil’s primary product is an infant milk formula, which not only includes milk but also cereals and protein supplements. These additional ingredients classify the product as a substitute for mother’s milk rather than a pure milk product.
The GST rate for products is determined based on their Harmonized System of Nomenclature (HSN) codes. The AAR observed that Bebymil’s products fall under HSN code 1901. This code is designated for products that contain milk as an ingredient, not solely milk-based products, which are classified under HSN 0402. HSN 1901 incurs an 18 percent GST, while HSN 0402 incurs a 5 percent GST.
Sandeep Sehgal, a partner at tax and consulting firm AKM Global, highlighted that the ingredient composition of any product is crucial in determining its correct classification and, consequently, the applicable GST rate. This ruling underscores the importance of understanding the specific HSN code classifications to ensure compliance with the appropriate GST rates.
Views: 20
In India, the Goods and Services Tax (GST) on baby foods varies depending on the type of product. Preparations suitable for infants or young children that are put up for retail sale are subject to an 18% GST rate. This includes all preparations made from cereals, flour, starch, or milk intended for infant use and sold in retail packaging. On the other hand, milk and cream, including skimmed milk powder but excluding condensed milk, are taxed at a 5% GST rate. Similarly, milk food for babies also falls under the 5% GST category. In summary, baby foods and preparations for infants or young children are generally taxed at either 5% or 18% GST rates in India. The higher 18% rate applies to retail packaged preparations for infants and children, while basic milk and milk products for infants are taxed at the lower 5% rate.