Idli, dosa tax: 18% GST applicable on packaged products that can make food items, rules AAR

The way South Indian delicacies Idli or Dosa are prepared could impact their tax rates. Dosa mix sold by companies is neither dosa nor batter and should be taxed at 18% under the Goods and Services Tax (GST) — the Tamil Nadu Authority for Advance Ruling (AAR) has held.

According to the ruling, dosa mix and idli mix sold by companies are packaged products and should be taxed as one. Tax rates for dosa, flour and batter are at 5% and the company in question wanted to apply this GST rate.

The ruling is set to impact several other packaged products. While AAR rulings are only applicable to the company that has approached the particular bench, it tends to create a precedent in law, tax experts said.


“Irrespective of composition of individual products, the contents are in the form of flour/granules/strips, which are to be mixed with water/curd to make into batter and are not batter in the form it is sold,” the AAR ruled.

Product classification under the GST framework has been a touchy issue in the past as well.

The GST framework is more nuanced and tax rates applicable on the product tend to depend on various factors such as the composition of the product and the end-use of the product.

“Whether chocolate burfi is a chocolate or a burfi, spectacles vs goggles, coconut oil vs hair oil, fruit juice vs aerated drinks are other examples that kept everyone perplexed. The solution is simple - to have least possible rate slabs with wider coverage and minimal exemptions,” said Harpreet Singh, Partner, indirect tax, at KPMG in India. “Time, money, litigation all can be saved if necessary ameliorative action on rationalization of rate slabs is undertaken by the decision makers,” he said.

The AAR said that because the product is sold as a “powder” and not batter it cannot be considered a batter.


“Extending a GST rate of 5% on idli/dosa batter is inapplicable as the product sold is a powder and not a batter,” the AAR ruled.

In the past, controversies have erupted around whether the ‘chutney’ sold along with ‘bhajiya’ (fritters sold in Gujarat) should be taxed, or whether GST on a ‘samosa’ eaten inside a shop or outside should be treated differently for tax purposes.

Earlier, several state AAR had ruled on GST applicable on food items.

For example, parata is not similar to ‘paratha’ but naan and a samosa eaten over the counter and on a chair outside the shop probably tastes different as it should be taxed differently, they have said.

Many other AARs have ruled on whether a cookie wrapped in chocolate is a cookie or not and if a chocolate wrapped around a wafer biscuit is a biscuit or not.