GST on Bakery Products

Published on: Wed Nov 01 2023
GST and HSN Codeon Bakery Products

GST on Bakery Products

The Goods and Services Tax (GST) is a significant tax reform in India that aims to simplify the indirect taxation system. It has streamlined the taxation of goods and services across the country. Bakery products, which are an integral part of our daily lives, also come under the purview of GST. In this article, we will explore the various aspects of GST as it applies to bakery products.

Applicability of GST Registration for Bakery Products

GST registration is mandatory for businesses that have an aggregate turnover exceeding a certain threshold. The threshold for GST registration was ₹40 lakhs (for goods) and ₹ 20 lakhs for most states in India. Bakery product businesses need to monitor their turnover to determine whether GST registration is required.

Rate of GST on Bakery Products

The Goods and Services Tax (GST) rates on bakery products in India vary depending on the nature and ingredients of the products. Here are the general GST rates for bakery products:

Basic bakery products such as bread and plain buns, without any additional toppings or fillings, typically attract a lower GST rate of 5%.

Bakery products with chocolate or cream toppings, as well as other confectionery items, generally fall into the higher GST rate category of 18%.

Some specialty bakery items like pastries, cookies, and other similar products may also be categorized under the 18% GST rate.


Input Tax GST Credit on Bakery Products Supplier

Under the Goods and Services Tax (GST) system in India, businesses can claim Input Tax Credit (ITC) on the GST they have paid on their purchases, including bakery products and ingredients. Here's how ITC works for bakery product suppliers:

  1. Eligibility for ITC: To be eligible to claim ITC, a business should be a registered taxpayer under GST. If you are a bakery product supplier, you need to ensure that you have a valid GST registration.

  2. ITC on Bakery Ingredients: Bakery owners can claim ITC on the GST paid for the purchase of ingredients such as flour, sugar, milk, eggs, flavorings, and any other inputs used in the production of bakery products. This ITC can be offset against the GST liability on sales.

  3. Records and Invoices: Proper maintenance of invoices and records is crucial. Both suppliers and buyers need to maintain accurate records of GST invoices and transactions to claim ITC. Invoices should mention the GST details of the supplier and the recipient, the HSN code of the products, and the amount of GST paid.

  4. Matching of Invoices: The GST Network (GSTN) portal facilitates the matching of invoices between suppliers and buyers. This ensures that the details of the supplier's GST return match with the buyer's GST return, thus preventing any discrepancies.

  5. Timely Filing of GST Returns: To claim ITC, it's essential to file your GST returns regularly and accurately. The ITC amount can only be claimed if the details match the invoices uploaded by your suppliers in their GST returns.

  6. Reversal of ITC: In some cases, ITC might need to be reversed if the recipient has not paid the supplier within 180 days from the date of issue of the invoice. Reversal can also happen if there is a discrepancy or mismatch in the invoices.

  7. Cross-Verification: The GST authorities may cross-verify ITC claims and conduct audits to ensure that ITC is being rightfully claimed. Therefore, maintaining accurate records and compliance is crucial.
     

GST Payment Due Date

The due date for GST payment on bakery products depends on various factors, including the type of taxpayer, their turnover, and whether they are filing monthly or quarterly returns. Here are the general due dates for GST payment:

  1. For Regular Taxpayers (Monthly Filers): Monthly GST payment is typically due on the 20th of the following month. For example, the GST liability for June should be paid by the 20th of July.

  2. For Composition Taxpayers (Quarterly Filers): Composition scheme taxpayers usually pay GST on a quarterly basis. The due date for payment is the 18th of the month following the end of the quarter.
       For example, for the April-June quarter, the GST payment is due by July 18th.

  3. For Non-Resident Taxpayer: Non-resident taxpayers are required to pay GST on the 20th of the month following the end of the tax period, irrespective of whether they are monthly or quarterly filers.

    Please note that the due dates for GST payment may vary for specific categories of taxpayers or under different circumstances.


HSN Code for Bakery Products

Harmonized System of Nomenclature (HSN) codes are used to classify goods for taxation purposes under the Goods and Services Tax (GST) in India. HSN codes are essential for accurately identifying and categorizing products. The specific HSN code for bakery products can vary depending on the exact type of product. Here are some common HSN codes for bakery products:

  1. HSN Code for Bread: 1905
    This code typically applies to bread, including various types such as white bread, wheat bread, and other varieties.

  2. HSN Code for Biscuits and Cookies: 1905
    The same HSN code 1905 is commonly used for biscuits and cookies. The differentiation between various types of biscuits and cookies can often be done based on product descriptions.

  3. HSN Code for Cakes and Pastries with Cream or Chocolate Toppings: 1905
    Cakes and pastries with cream or chocolate toppings usually fall under HSN code 1905. The specific type of cake or pastry can be described separately.

  4. HSN Code for Unsweetened Biscuits: 1905
    Unsweetened biscuits are often categorized under the same HSN code 1905, but their classification can be based on product descriptions.

It's important to note that the HSN code for a specific bakery product may vary based on its ingredients and characteristics. Bakery owners and suppliers should carefully select the most appropriate HSN code to ensure accurate tax calculations and compliance with GST regulations. To find the precise HSN code for a particular bakery product, you can refer to the official GST portal.

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