Ice cream at parlors to cost 18% GST

Ice cream at parlors to cost 18% GST

Unlike food cooked and served at restaurants, ice creams sold at parlors are manufactured items and are therefore taxable at 18%, the finance ministry said in a set of clarifications issued on Wednesday.

The clarifications are basing on the federal tax body's decisions, the Goods and Services Tax (GST) Council. These cover eight issues, including cloud kitchens, satellite launch services, grant of mining rights, and services relating to contract manufacture of liquor.

The finance ministry said that ice cream parlors that sell already manufactured ice cream do not have a restaurant's character. They do not catch in any cooking at any stage, whereas restaurant service involves the aspect of cooking while providing service.

"It is explained that where ice cream parlors sell already manufactured ice cream and do not cook or prepare ice-cream for consumption like a restaurant,

it is the supply of ice cream as goods and not as a service, even if the reserve has certain service ingredients.

Accordingly, it is clarifying that ice cream sold by a parlor or any similar outlet would attract GST at the rate of 18%," the ministry said. Food sold at restaurants is taxation at 5% without an input tax credit.

While the circular provides necessary clarity on GST treatment for ice cream parlors,

Ice cream at parlors to cost 18 GST 1unsplash image

Read More : GST revenue collection ₹1.17 lac crore in September

It might open an area of doubt for other such food suppliers who sell already manufactured food items with only a particular ingredient of service, said Abhishek Jain, tax partner at EY.

The ministry also said that as per GST Council recommendation, the service provided by way of cooking and supply of food by cloud kitchens/central kitchens are covered under 'restaurant service' and attracts 5% GST without ITC. It is clear that takeaway services and door delivery services for food consumption are considered restaurant services, the ministry said.

The ministry also clarified that Antrix Corp provides satellite launch services. Ltd to customers outside India constitutes export of service and shall be zero-rated. If the service recipient is a location in India, the satellite launch services would be taxable.

Service by way of grant of mining rights from 1 July 2017 to 31 December 2018 was taxable at 18%.

The government also clarified that a 28% rate applies to admission to a casino or race club or access to a sporting event like IPL.

Also, services by way of job work about the manufacture of alcoholic liquor for human consumption are not eligible for the GST rate of 5%. Such job work would attract GST at the rate of 18%, the ministry said.

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