ITC on custom milling

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This discussion clarifies that Input Tax Credit (ITC) is available to rice millers undertaking custom milling and receiving custom milling charges subject to 5% GST. It explains that GST on packing materials is charged separately at 18%, and ITC can be claimed on spares for milling machinery. The advice also covers scenarios involving composite agreements, where transportation charges and the value of retained by-products like husk and bran are also subject to GST.

Sabita Sahoo

Sabita Sahoo (Querist)
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13 October 2020 Can ITC be available to rice miller who are engaged in custom milling activity and received custom milling charges which is leviable to GST@5%?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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13 October 2020 Yes, ITC is available.

Sabita Sahoo

Sabita Sahoo (Querist)
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13 October 2020 If packing material @18% and gst on custom milling @5% ,how tax will flow?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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13 October 2020 5% GST applicable only on miling charge. Charge 18% GST on paking material. Claim ITC on spares etc used for milling machine.

PARAS CHHAJED

PARAS CHHAJED

(Expert)
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14 October 2020 If there is a composite agreement for custom milling which also included lifting of Paddy from specified locations and delivery of Rice to specified warehouses against custom milling of Paddy then GST is payable on transportation charges received besides custom milling charges. If Paddy Husk, Rice Bran are retained by miller against custom milling then value of such retained material is also liable to GST being consideration for custom milling.

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