Cold storage refers to a facility that maintains controlled temperatures to preserve perishable goods like fruits, vegetables, dairy products, pharmaceuticals, and other temperature-sensitive items. In India, the Goods and Services Tax (GST) has specific provisions for services related to cold storage,
GST on Leased Premises for Cold Storage
The Ruling Authority has imposed a GST rate of 18% on rental charges for premises leased for cold storage of agricultural products. The plaintiff, a business providing storage and warehousing services for agricultural products, requested a preliminary ruling to understand the tax implications of rental fees for leased premises for the cold storage of agricultural products.
The applicant further wanted to clarify what are the tax implications of cold storage facilities leased for storage with or without preservation and maintenance to a private enterprise and finally what are the tax implications of seed/agricultural products for storage or storage on behalf of farmers and traders.
The Annual Activity Report decided that the GST rate of 18% applies to leased premises for cold storage of agricultural products for leasing fees. It has also been decided that 18% GST applies to cold storage facilities let on rent for storage with or without preservation and maintenance to a private enterprise.
Classification of Cold Storage Under GST
Cold storage services are primarily categorized as storage and warehousing services under HSN (Harmonized System of Nomenclature) Code 9967. This code covers services related to storage and warehousing of goods, including refrigeration and cold storage, and falls under Chapter 99 of the GST Act.
Key Components:
- Cold storage for perishable goods.
- Storage and warehousing services.
GST Rates on Cold Storage Services
Cold storage services are subject to GST, but the rate applied can depend on the type of goods being stored.
GST on Cold Storage Services for Agricultural and Food Products
- Cold storage services related to the storage of agricultural produce, dairy products, and other foodstuffs are exempt from GST.
- This exemption is provided under Notification No. 12/2017-CT (Rate), which covers services that deal with the storage and warehousing of agricultural produce.
- Example: Cold storage for fruits, vegetables, milk, etc., does not attract any GST.
GST on Cold Storage for Non-Agricultural Goods
- Cold storage services for goods other than agricultural produce are subject to a 5% GST rate (under HSN Code 9967).
- Example: Cold storage for pharmaceuticals, chemicals, or other non-food products that require temperature control may attract a 5% GST.
GST on Renting of Cold Storage Facilities
If a cold storage facility is rented out to a customer for the storage of goods, GST would apply on the rental service.
- The rental income generated from leasing out a cold storage space is subject to 18% GST, based on the applicable service tax rate on leasing or renting services.
Exemptions and Special Cases
GST Exemption on Cold Storage for Certain Goods
- Agricultural produce, such as grains, fruits, vegetables, and seeds, are exempt from GST when stored in cold storage.
- Livestock, fishery products, and poultry may also fall under the exemption clause if they are directly linked to agriculture.
No Input Tax Credit (ITC) on Exempt Services
When cold storage services are exempt from GST (like agricultural goods), the service provider cannot claim an Input Tax Credit (ITC) on any tax paid on goods or services used to provide the cold storage service.
FAQs
What is the GST rate on Cold Storage services?
The GST rate on cold storage services is 18%. This applies to businesses that offer cold storage facilities for preserving perishable goods, including food items, pharmaceuticals, and other temperature-sensitive products.
Who is required to pay GST on Cold Storage services?
The responsibility of paying GST on cold storage services lies with the service provider. Cold storage operators or businesses providing warehousing services for perishable goods are required to collect GST from their customers
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