The General Anti-Avoidance Rules Authority (GAAR) has issued an update that indicates a possible reclassification of instant mixes such as dhokla, idli and dosa. Therefore, this will increase their GST rate to 18%. This decision takes these items out of the low tax basket “sattu”. The impact on the producers and consumers is significant.
Manufacturers’ Implications
In the past, the sector had been enjoying reduced taxes. But Dosa, Idli, Khaman mix came under one classification with sattu for these instant mixes. However, they would now be taxed at higher GST rates as per the new regime. These products have ceased being basic commodities but form part of luxury products.
- Increased Production Costs: Manufacturers may face increased costs which could be passed on to customers.
- Compliance Requirements: For fear of paying fines levied by penalties concerning wrong GST registration or return filing becomes essential.
Consumer Impact and Market Reactions
With this imposition in taxes every packet of ready-to-cook-mixes will become costlier. Consequently, there could be a change in consumption patterns towards other non-branded alternatives.
Strategic Advice for Businesses
Your business now needs to adapt to these changes quickly.
- Review Product Classifications: GST Guidelines now must be strictly followed to stay compliant.
- Educate Consumers: As of the recent update the burden is on your shoulders to Inform customers about price changes. You should also educate and make them aware about the reasons behind them to maintain trust and transparency.
Conclusion
In conclusion, The decision by GAAR is a reminder of the evolving nature of GST regulations and the need for businesses to stay informed and compliant. It’s essential for businesses to stay up to date of these changes and ensure that all aspects of GST registration and GST return filing are handled accurately.
Also Read:
Moreover, If you want any other guidance relating to 18% GST on Dosa, Idli, Khaman Mixes, Please feel free to talk to our business advisors at 8881-069-069.
Download E-Startup Mobile App and Never miss the latest updates narrating to your business.