AAR Imposes 18% GST on Infant Food with Milk and Other Ingredients

The Rajasthan Authority for Advance Ruling (AAR) has decided that infant food products with ingredients other than milk will be taxed at 18% GST while pure milk products will remain at 5% GST.

This ruling came after Jaipur-based Baby milk company asked for clarification on the tax rate for their infant milk food and milk products sold under the brand Momylac. If this decision stands it could apply to similar products in the future.

The authority observed that the company’s main product is an infant milk formula, which contains cereals and protein supplements, designed as a substitute for mother’s milk.

GST rates for goods are set according to their Harmonized System of Nomenclature (HSN) codes. In this case, the authority noted that the products are categorized under HSN 1901, which includes items with milk as an ingredient, rather than HSN 0402, which pertains specifically to milk products.

According to the AAR, products that fall under HSN 1901 are subject to an 18% GST rate. The products classification under other category where milk is an ingredient among many. Nevertheless, products categorized as HSN 0402, referred solely on milk items, get a lower GST rate at 5%. Therefore, this distinction underscores that a combination of any other materials needed may influence how they are labelled.

Once again depending on that category ingredient proportions determine the right rate of tax imposed. The HSN also changes over time hence changes in this category automatically influence rate variation. This is what influences the applicable GST rate through determining the combination of items put together; even though people may make wrong assumptions about certain terminology because they do not bother knowing what distinguishes them.