Rajasthan Authority for Advance Ruling (AAR) has decided that infant food containing milk along with other ingredients could face an 18% goods and services tax (GST) rather than the 5% levied on milk products, a potential precedent for similar cases.
This ruling came in response to an inquiry from Bebymil, a Jaipur-based company, regarding the GST rate for their products—Momylac, marketed as milk food and milk for infants.
AAR clarified that Bebymil’s main product is infant milk formula, comprising cereals and protein supplements, as a substitute for mother’s milk.
The GST rates for products are determined by their Harmonized System of Nomenclature (HSN) codes. Bebymil’s products fall under HSN 1901, which covers items where milk is among the ingredients, rather than HSN 0402, specifically for milk products, explained Sandeep Sehgal, partner at AKM Global, a tax and consulting firm.
AAR declared that products under HSN 1901 are subject to an 18% GST. Sehgal highlighted that items categorized under HSN 0402 incur a 5% GST. He underscored that the proportion of ingredients significantly affects the classification and the GST rate applicable to the product.
