A major setback for pizza lovers, the Haryana appellate authority for advance ruling (AAAR) ruled that pizza toppings will be charged a higher GST. Since toppings are not pizza, 18 percent higher GST should be charged on them. Based on its March 10 ruling, the AAAR said the pizza topping should attract 18% GST since its preparation method differs from that of pizza. As well, the body considered all the ingredients used in a topping, concluding that a pizza topping is sold as ‘cheese topping’ but is really not cheese, and should therefore be taxed more.
In stating that ‘vegetable fat’ constitutes a substantial portion of a pizza topping (about 22%), AAAR stated that it does not qualify to be classified as ‘processed cheese’ or a type of cheese. Topping pizza deserves to be classified as ‘food preparation,’ it said.
GST on pizzas
Pizza GST rates vary according to how they are prepared and sold. Pizza consumed in a restaurant attracts 5 percent GST if it is retailed and sold there. Pizza bases themselves attract 12 percent GST. However, home delivery of pizza is subject to a GST of 18%. GST rates could be based on three tests – the common parlance test, the end-use test, or the ingredients test. ‘Tax rates may differ depending on how a product is classified’, they added.
The tax rate on ‘fat cheese’ is lower.
‘The authorities have given weightage to the actual ingredients vis-a-vis common parlance, under which one would treat them as cheese toppings and classify them accordingly,’ Economic Times quoted Harpreet Singh, partner, KPMG India as saying. In other words, classification is dependent on various factors, including end use and key components of the products, common language, etc., making it a rather complex process.
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