PADDY MILLING INTO RICE ON JOB WORK BASIS RATE OF SERVICES TAX UNDER GST
The Goods and Services Tax Act, 2017 came into force in
India with effect from 1.7.2017.
The milling of paddy is not an
intermediate production process in relation to cultivation of plants and it is
a process carried out after the process of cultivation is over. Paddy has been harvested and processing of
paddy into rice is not usually carried out by cultivators but by rice millers.
Milling of paddy into rice also changes its essential characteristics.
Therefore, milling of paddy into rice cannot be considered as an intermediate
production process in relation to cultivation of plants for food, fibre or
other similar products or agricultural produce.
In the above circumstances, the
Central Government has clarified that milling paddy into rice is not eligible
for exemption under S. No 55 of Notification 12/2017 - Central Tax (Rate) dated
28th June 2017 and corresponding notifications issued under IGST and UTGST
Acts.
GST
rate on services by way of job work in relation to all food and food products
falling under Chapters 1 to 22 has been reduced from 18% to 5% vide
notification No. 31/2017-CT(R) [notification No. 11/2017-CT (Rate) dated
28.6.17, S.No. 26 refers]. The Central Government has clarified that milling of
paddy into rice on job work basis, is liable to GST at the rate of 5%, on the
processing charges (and not on the entire value of rice).
To view the Central Government Circular click the link given below:
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