No GST cut for idli-dosa batter, hotel body calls it unfair

CHENNAI: In the recent GST 2.0 overhaul, the government moved many staples into the zero-tax bracket – plain rotis, chapatis, ready-made parottas and parathas (earlier taxed at 18%), paneer, UHT milk, and pizza bread are now exempt. However, idlis and dosas continue to face 5% GST when served in restaurants and a steep 18% on packaged batter, which are widely sold in markets.

Hotel and restaurant associations have reacted sharply, questioning the government’s rationale. Restaurant owners say the decision shows a lopsided approach to what qualifies as essential food. “There is partiality in leaving idlis and dosas out of the list,” said a Chennai restaurant owner. “For the families here, these are daily meals, just like chapati in the North. Why should they be treated differently? And when batter itself is taxed 18%, it becomes even harder for small outlets that rely on it.”

The Chennai Hotel Association echoed the concern. “We genuinely thought idli and dosa would be moved to nil GST this time. Instead, nothing changed,” said M Ravi, president of the association.

He pointed out that restaurants cannot claim input tax credit (ITC) for these items, even though ITC is available for other products, such as sweets. “When you can cut the tax for pizza dough, why can’t you do the same for the staple food of the South?” he asked.

Because restaurants under the 5% slab are barred from availing ITC, the taxes they pay on raw materials, rent, and utilities cannot be adjusted.

The dual burden – 5% at the counter and 18% on batter, means the small eateries will continue to pass on the higher costs on to customers, as wheat-based staples now sit in the zero-tax bracket, rice-based foods, central to the South, continue to carry GST. As the new rates take effect from September 22, the hotel body says it will press harder for parity.