GST on Rice

GST on rice is a topic that often causes confusion among buyers, sellers, and small traders. Rice is a daily essential in India, so understanding how Goods and Services Tax applies to it is important. The GST rules on rice are simple once you know the basic conditions.

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GST Treatment of Rice in India

Rice falls under Chapter 10 of the HSN classification. Under GST law, rice is exempt from tax when sold loose or without being pre-packaged and labelled. This means rice sold in open sacks or loose quantities does not attract GST.

However, GST on rice becomes applicable at 5% when it is pre-packaged and labelled. This rule has been in force since 18 July 2022. The tax applies regardless of whether the rice is branded or unbranded. The key factor is packaging, not the name or logo.

What Counts as Pre-Packaged and Labelled Rice

Rice is treated as pre-packaged when it is packed in a fixed quantity before sale and labelled as per the Legal Metrology Act. Common pack sizes include 1 kg, 2 kg, 5 kg, or multiples of 5 kg. These packs are meant for retail sale and usually carry standard declarations.

Large bags, such as 50 kg sacks, are generally not considered pre-packaged for retail purposes. As a result, they remain outside the scope of GST on rice, provided they are not labelled as retail packs.

GST Rate on Different Types of Rice

All common varieties of rice, including basmati, parboiled rice, brown rice, broken rice, and puffed rice, follow the same GST rule. Loose rice is taxed at 0%, while pre-packaged and labelled rice attracts 5% GST.

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Conclusion

In simple terms, GST on rice depends on how it is sold. Loose rice stays tax-free, while pre-packaged and labelled rice is taxed at 5%. Knowing this distinction helps avoid errors and ensures better compliance with GST rules.