GST on ice cream

Last updated on July 23rd, 2022 at 12:35 pm

GST on ice cream

Ice-cream manufacturers

Ice cream manufacturers have to pay GST @ 18% (HSN – 21050000) where major ingredients are milk, sugar, fruits, etc used to manufacture ice cream. Manufacturers can claim the input tax credit of the major ingredient milk as that is brought under the GST ambit w.e.f. 18th July 2022 and can also claim ITC of the costs incurred on the packaging, advertising, maintenance expenses, acquiring or renting plant, machinery, and factory premises.

Ice cream manufacturers are not permitted to opt for a composition scheme and pay lower tax @ 1% even if their turnover is less than Rs 1.5 crores.

Note: They are treated at par with the manufacturers of pan masala and tobacco who are not allowed to opt for a composition scheme.

Ice-cream parlors

When ice cream is served at the ice cream parlors, it will attract GST @ 18% (HSN – 21050000).  As generally, they sell the already manufactured ice-creams and do not engage in any form of cooking at any stage hence will not fall under the criteria of a restaurant. Just by providing seating arrangements, it cannot be treated at par with restaurants.

Note: CBIC has clarified vide GST Circular no. 164 dated 6th October 2021 that even if the supply of ice creams at ice cream parlors has certain ingredients of service will not qualify as a restaurant.

Ice cream served at restaurants

When ice cream is served at the restaurant, it will attract GST depending upon the GST applicability on the restaurant. As services of supplying goods in the form of food or any other article for human consumption will be classified under restaurant services. So if a restaurant supplies food, beverages, or ice cream it will be treated as restaurant service.

If the restaurant is registered under the composition scheme then GST will not be charged to the customer. (Note: Restaurant will pay 5% GST without ITC)

If the restaurant is required to pay GST @ 5% then 5% GST will be charged to the customer. (Note: Restaurant will pay 5% GST without ITC)

If the restaurant is required to pay GST @ 18% then 18% GST will be charged to the customer. (Note: Restaurant will pay 18% GST with ITC)

Ice cream served by outdoor caterers

When ice cream is served by outdoor caterers then 18% GST will be charged to the customer. (Note: Outdoor Caterer will pay 18% GST with ITC)

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CA Ankita Khetan

Founder at Financepost.in

Chartered Accountant in practice, DipIFRS (from ACCA, UK), Post Graduate in Commerce, Certified Independent Director (from IICA), and holds a certification in Forex and Treasury Management course (by ICAI).

She can be contacted at info.financepost@gmail.com

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Disclaimer: The above content is for general info purpose only and does not constitute professional advice. The author/ website will not be liable for any inaccurate / incomplete information and any reliance you place on the content is strictly at your risk.

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