1. What Happened in GST 2.0
The government exempted certain foods from GST, including:
Plain rotis, chapatis, parottas, parathas
Paneer, UHT milk, pizza bread
These exemptions applied to items previously taxed at 18%.
South indian staples, like idli, dosa, puttu, and idiyappam, remain under the 5% GST slab.
2. Hoteliers’ Confusion
Hoteliers and restaurant associations, especially in Tamil Nadu and South India, are puzzled over this selective exemption.
Some believe the exemption applies only to packaged items sold in stores, while food served in restaurants still attracts GST.
The logic behind excluding idli/dosa, which are daily staples like chapatis in the North, is unclear.
3. Input Tax Credit (ITC) Issues
Restaurants under the 5% GST slab cannot claim ITC on:
Raw materials
Rent
Utilities
In contrast, packaged foods like sweet and savouries can claim ITC.
This creates a disadvantage for small eateries who rely on batter and other taxed ingredients.
4. Dual Taxation Problem
Restaurants must pay 5% GST on idli/dosa sold, but the batter itself attracts 18% GST.
Small outlets have no choice but to pass on extra costs to customers, making everyday meals more expensive.
5. Hoteliers’ Demand
Associations like the Tamil Nadu Hotels Association and Chennai Hotel Association want:
GST exemption for idli/dosa, like chapatis in the North
Reduction in GST on commercial cooking gas
Ability to claim ITC to avoid dual taxation burden
6. Key Takeaways
Regional disparity: GST relief seems focused on Northern staples, leaving Southern staples taxed.
Small eateries at disadvantage: High input costs and inability to claim ITC increase operational burden.
Pending clarification: Experts say amendments may still come, but currently, the policy is confusing and inconsistent.
💡 Summary: The GST 2.0 exemption favors Northern staples like chapati, while Southern staples like idli and dosa remain taxed, causing financial strain on restaurants and raising questions about fairness and regional equity in India’s tax policy.
Disclaimer:
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk..jpg)
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