The Goods and Services Tax (GST) has significantly impacted various sectors in India, including agriculture. Rice, being a staple food for a large portion of the Indian population, is subject to specific GST rates and HSN codes. This blog post aims to provide a detailed overview of GST on rice, including the relevant HSN codes, exemptions, and recent changes in GST regulations.
GST Rates on Rice
The GST rates on rice vary depending on its form and packaging. Here are the key points:
- Unbranded and Loose Rice: Rice that is sold loose and unbranded is exempt from GST. This means that if you purchase rice that is not pre-packaged or labeled, you do not have to pay any GST on it. This exemption helps keep the cost of basic food items low for consumers.
- Pre-packaged and Labeled Rice: From July 18, 2022, the GST Council lifted the exemption on branded commodities. Now, rice that is pre-packaged and labeled attracts a GST rate of 5%. This includes rice sold in packages that are labeled with a brand name and meet the criteria of a pre-packaged commodity as per the Legal Metrology Act.
HSN Codes for Rice
The Harmonized System of Nomenclature (HSN) is an internationally accepted system for classifying goods. Here are the HSN codes for different types of rice:
- 1006: This is the primary HSN code for rice.
- 100610: Rice in the husk (paddy or rough)
- 10061010: Of seed quality
- 10061090: Other
- 100620: Husked (brown) rice
- 100630: Semi-milled or wholly-milled rice, whether or not polished or glazed
- 10063010: Parboiled rice
- 10063020: Basmati rice
- 10063090: Other
- 100640: Broken rice
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Detailed Explanation of GST Exemptions on Rice
Understanding the exemptions under GST for rice is crucial for businesses and consumers alike. Here’s a detailed breakdown:
- Unbranded and Loose Rice: As mentioned earlier, rice that is sold loose and unbranded is completely exempt from GST. This helps keep the cost of basic food items low for consumers.
- Pre-packaged and Labeled Rice: From July 18, 2022, the GST Council lifted the exemption on branded commodities. Now, rice that is pre-packaged and labeled attracts a GST rate of 5%. This includes rice sold in packages that are labeled with a brand name and meet the criteria of a pre-packaged commodity as per the Legal Metrology Act.
- Criteria for Pre-packaged Commodities: A pre-packaged commodity, as defined under the Legal Metrology Act, has the following characteristics:
- It is packed without the purchaser being present.
- It is packed in a predetermined quantity.
- It is labeled with the brand name and other required details.
- Fortified Rice Kernel (FRK): The GST rate on Fortified Rice Kernel (FRK) has been reduced from 18% to 5% as per the latest recommendations by the GST Council. This reduction aims to make fortified rice more affordable and promote its consumption for better nutrition.
- Exports: Exports of rice are zero-rated under GST. This means that while the export itself is not taxed, businesses can claim input tax credit on the GST paid on inputs used in the production of the exported rice.
Recent Changes in GST Regulations
The GST landscape in India is continuously evolving. Here are some of the recent changes that could impact the rice industry:
- GST Amnesty Scheme: Waivers for interest and penalties on demand notices from FYs 2017-18, 2018-19, and 2019-20 are available if the full tax amount is settled by March 31, 2025.
- E-invoicing for Small Businesses: Starting April 1, 2025, small businesses will be required to upload e-invoices to the Invoice Registration Portal (IRP) within 30 days from the date of invoice generation. This aims to improve transparency and reduce tax evasion.
- New GST Return Filing System: The GST Network introduced the Invoice Management System (IMS) on October 14, 2024, to simplify compliance and auditing for taxpayers. This system enhances ease of filing, reduces errors, and improves the reconciliation process.
- Anti-Evasion Measures: The government has strengthened its anti-tax evasion measures under GST, including more robust monitoring of fraudulent Input Tax Credit (ITC) claims and the introduction of new AI tools to prevent tax evasion.
Frequently Asked Questions (FAQs)
Yes, loose and unbranded rice is completely exempt from GST.
The GST rate on pre-packaged and labeled rice is 5%.
The primary HSN code for rice is 1006, with specific codes for different types such as 100610 for rice in the husk, 100620 for husked rice, 100630 for semi-milled or wholly-milled rice, and 100640 for broken rice.
Recent changes include the GST Amnesty Scheme, mandatory e-invoicing for small businesses from April 1, 2025, the introduction of the Invoice Management System (IMS), and strengthened anti-evasion measures.
Exports of rice are zero-rated under GST, meaning the export itself is not taxed, but businesses can claim input tax credit on the GST paid on inputs used in the production of the exported rice.
Conclusion
Understanding the GST rates, HSN codes, and exemptions for rice is crucial for businesses involved in its production, packaging, and sale. It ensures compliance with tax regulations and helps in accurate billing and documentation. The recent changes in GST regulations aim to enhance transparency, reduce tax evasion, and simplify compliance processes. Staying updated with these changes can help businesses navigate the GST landscape more effectively.
