Diwali is the time to release every one of your limits and indulge to your heart’s celebration. It’s an especially pleasant time for both the sweet tooths as well as the dealers of traditional sweets. Everything from traditional sweets to the fabulous gifts is the focal point of Diwali fest. Around this time, the government also manages to generate more revenue from the Diwali gift traders having GST registration, for its economic welfare programmes.
So we have to agree that all the glittering occasions during Deepawali are incomplete without sweets made from different flavourful and rich desi ingredients that our cuisine is known for. From gulab jamuns to Kaju katlis to desi ghee pedals, festive sweets possess large amounts of every single Indian home as it is custom to exchange confectionaries with friends and loved ones or the relatives. Be that as it may, in the event that you wish to surprise your loved ones with something unique this time around, you might need to take a look at some assortment of sweets weeks in advance.
Kinds of sweets being available in Indian shops
As the festival of lights arrives and gifting sweets begins as the custom in full swing, apparently people in the city are busy shopping for the non-customary sweets and the conventional mithais.
Nowadays, the sweet sellers having GST registration, have begun trading in Middle East sweets. Specifically, they have now started offering the extravagant of the gifting variety. In spite of the fact that it is different from the customary Indian mithai, everything is close to Indian items. These varieties also include Persian delicacies. So, how to ascertain the application of GST tax on such variants?
We will try to understand the application of GST on all traditional sweets.
2. Recent GST ruling for Indian sweets
A recent GST tax ruling by the GST department indicates that the total GST rate for any kind of food item sold by a retailer having GST registration shall be 5%.
- Additionally, if there is also a restaurant that kept running by the retailer in the same premises, then the products shall be taxed differently.
- There are numerous instances of such retailers, that we can find easily around us. To name some we have Bikanerwala, Haldirams, Ghasitaram etc.
- Currently, for such retail outlets, the GST rates are as follows:
- 12% on the sweets and
- 18% on pastries & cakes.
- Then separately, the GST rate for the restaurant services is 5%.
3. GST on the restaurant inside a sweets outlet
Recently, the Authority of Advance Ruling (AAR) has stated that in the case a restaurant is open inside the same premises of the sweet shop, then the GST rate on such restaurant services is to be levied at the rate of 5%.
4. The opinion of the shopkeepers
According to owners of some sweets outlets having GST registration, the current ruling necessitates further assessment.
- The overall rates of GST are as per the nature of supply, rather than being commonly dependent on the method of giving the supply.
- It is reasonable to say that servings of the sweetmeats at an eatery inside the restaurant could be treated as a café service.
- The corresponding supply by a sweetshop on a takeaway premise would ordinarily draw in the material rate of GST on the sweets or other items being sold.
Also, know about the importance of FSSAI registration for Diwali sweet shops
5. Mixed & Composite supply
Government has justified the ruling by saying that restaurant operating inside the same premises of the sweet shop is an example of Mixed supply.
- When two items with various expense rates are clubbed together, it is called Mixed supply. E.g. hair oil and hairbrush — where assessment rate for oil is 18% while for the brush is 12%. On the off chance that a maker was to consolidate both and sell it as a combo at that point GST rate of 18%, or the higher of the two will apply.
- On the other hand, the composite supply under GST discusses certain services that are complementary. Like if sweets are being sold with the sweet box, then it will be a composite supply, where sweets are the principal supply.
- Consequently, for this situation, the GST rate on the principal supply— sweets will apply even if they are served in an extravagant type of box.
Hence, we see, the restaurants inside the sweet shop is a kind of Mixed supply, where the GST rate on restaurant service will apply.