On this page
- Taxation of Rice, Wheat, Cereals, and Flours Under GST
- What Constitutes a Pre-packaged Commodity for GST?
- HSN Codes and Applicable GST Rates for Grains and Cereals
- Frequently Asked Questions (FAQ)
- Is there GST on rice and wheat?
- What is the GST rate on atta and flour?
- Why does packaging change the GST on grains?
- Are all grains taxed the same way?
GST on grains and flours depends on how they are sold. Unbranded, loose grains and flours such as rice, wheat and atta are exempt (0% GST), while the same items when pre-packaged and labelled attract 5% GST. So packaging and labelling decide whether GST applies.
Initially, specific branded or unbranded goods, including rice, were exempt from Goods and Services Tax (GST). However, effective July 18, 2022, this exemption was removed for pre-packaged and labeled commodities, making them subject to GST. As of December 21, 2024, the GST Council’s 55th meeting proposed a reduction in the GST rate for Fortified Rice Kernel (FRK), classified under HSN code 1904, from 18% to 5%. This change awaits implementation through official circulars and notifications.
Taxation of Rice, Wheat, Cereals, and Flours Under GST
Goods falling under Chapter 10 of the Harmonized System of Nomenclature (HSN) code, encompassing various cereals, were initially exempt from GST. These cereals include:
- Wheat and meslin
- Rye
- Barley
- Oats
- Maize (Corn)
- Rice
- Grain sorghum
- Buckwheat, millet and canary seeds
- Other cereals
The aforementioned tax-exempt goods lose their exemption and become subject to a 5% GST if they are “pre-packaged and labeled,” as defined by Section 2(l) of the Legal Metrology Act and its associated rules, meaning they are sold in unit containers with a registered brand name.
What Constitutes a Pre-packaged Commodity for GST?
A “pre-packaged commodity,” according to legal definitions, exhibits the following traits:
- Purchaser is not present, or the item was not pre-ordered.
- Packaged, potentially with or without a seal.
- Meets specified weight or measure standards, such as 100g, 200g, 500g, 1kg, 2kg, 5kg, or multiples of 5kg, as outlined by the Legal Metrology Act.
For instance, a 50 kg rice package is not classified as a labeled and pre-packaged commodity for GST purposes. However, if a rice miller sells 20 kg rice packages without the mandatory declarations under the Metrology Act, these packages would be deemed labeled and pre-packaged, thus attracting GST.
HSN Codes and Applicable GST Rates for Grains and Cereals
| HSN Code | Description | Other than pre-packaged and labelled | Pre-packaged and labelled |
|---|---|---|---|
| Chapter 10 | All goods i.e. cereals, put up in unit container and bearing a registered brand name, as detailed below- | 0 | 5% |
| 1001, 1008, 1101, 1102, 1109 | Wheat and meslin, wheat flour and meslin flour, buckwheat, millet, canary seeds, ragi, quinoa, jawar, bajra, wheat gluten, and bran | 0 | 5% |
| 1103 | Cereal groats, meal and pellets, including suji and dalia pre-packaged and labelled | NA | 5% |
| 1002 | Rye | 0 | 5% |
| 1003 | Barley | 0 | 5% |
| 1004 | Oats | 0 | 5% |
| 1005 | Maize (Corn) | 0 | 5% |
| 1006 | Rice, Rice in husk, Husked (brown) Rice, Rice, parboiled, Basmati rice, broken rice, and puffed rice | 0 | 5% |
| 1007 | Grain Sorghum | 0 | 5% |
Frequently Asked Questions (FAQ)
Is there GST on rice and wheat?
Loose or unbranded rice and wheat are exempt from GST. When pre-packaged and labelled, they attract 5% GST.
What is the GST rate on atta and flour?
Unbranded, loose flours such as atta are exempt, while pre-packaged and labelled flour attracts 5% GST.
Why does packaging change the GST on grains?
GST law taxes pre-packaged and labelled staple foods at 5%, while the same items sold loose or unbranded remain exempt, so packaging and labelling determine the rate.
Are all grains taxed the same way?
Most staple grains and their flours follow the same rule: exempt when loose or unbranded, and 5% when pre-packaged and labelled, subject to the specific classification.