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March 4, 2025

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GST Rate for Cereals: HSN Code for Chapter 10 Explained

The Goods and Services Tax (GST) has immensely impacted businesses in India, even the agricultural industry. Cereals are a basic diet for millions in India and are classified under one of the most crucial sub-segments of agriculture. The Harmonized System of Nomenclature (HSN) Code, that is, Chapter 10 of the HSN code list, identifies the cereals classification under the GST system. Knowledge of these categories and corresponding GST rates is important for farmers, traders, and businesses that are engaged in the sale and distribution of cereals. This blog presents a comprehensive analysis of the HSN code for cereals, the GST rates applicable, and how GST affects the cereal sector.

What is the HSN Code?

HSN code in GST helps to differentiate various products from one another, hence it is important. Getting the GST for HSN helps to get the idea of whether the product is different and unique from other products. Under this code, products no longer need a detailed explanation, as a specific code is assigned to every product. If a dealer or service provider's turnover falls above the slabs or limit of Rs. 5 crores, he or she must include an HSN/SAC-specific sales summary in his GSTR-1. Chapter 10 of the HSN Code exclusively addresses cereals, including different grains such as rice, wheat, barley, maize, and others.

HSN Code for Cereals under Chapter 10

HSN Code List for Cereals

The cereals covered under Chapter 10 and their respective HSN codes are:

Cereal Type	HSN Code
Wheat and Meslin	1001
Rye	1002
Barley	1003
Oats	1004
Maize (corn)	1005
Rice hsn code	1006
Grain Sorghum	1007
Buckwheat, Millet, and Canary Seeds	1008

Each of these cereals falls under different GST tax slabs, depending on whether they are in processed or unprocessed form.

GST Rates for Cereals

GST rates for cereals vary based on their processing stage. Below is a breakdown of the GST rates applicable:

Processing Stage of Cereals	GST Rate%
Unbranded and Unprocessed	NIL
Branded and packaged	5%
Processed and Ready-to-Eat	12%
Ready-to-Eat and Pre-Cooked	18%

Effect of GST on the Cereal Industry

GST has introduced various changes in the cereal industry in India. Some of the major effects are given below:

Advantage to Farmers and Consumers

1.Unprocessed, unbranded cereals continue to be tax-free, making basic food items affordable for consumers.

2. Farmers are advantaged by input tax credit (ITC) on inputs used in the production of cereals.

Equal Taxation of Branded Cereals

1. Various states previously had different taxes for cereals

2. GST provides a single 5% tax rate for branded cereals throughout India.

Increased Tax on Processed Cereal Products

1. Processed and packaged cereals incur higher taxes, which make prices higher for customers.

2. This might affect businesses processing and packaging cereals, as they have to reprice and comply with taxation.

Growth for Organized Businesses

1. With clear GST rates, big manufacturers of cereals and brands have improved transparency in taxation.

2. Transiting from an unorganized to an organized sector suits businesses in bulk cereal production and packaging.

Challenges

1. Branded Cereals at a Higher Price: A 5% GST on branded cereals makes them more expensive for consumers, which may lower demand.

2. Small Traders' Compliance Costs: The smaller traders are required to follow GST registration and filing, which is time-consuming.

3. Taxation Complexity: Companies handling taxable as well as non-taxable items must handle tax compliance effectively.

Also read: GST Rates and 1209 HSN Code for Seeds, Fruits, and Spores for Sowing

Exemptions and Special Cases

GST Exemption for Direct Sales by Farmers

1. Farmers selling direct cereals in mandis are exempted from GST.

2. This prevents small farmers from having the burden of tax compliance.

GST Refund for Exporters of Cereals

1. Indian cereals exported are levied zero percent GST under the Export Policy.

2. Exporters can recover GST paid on inputs used in production.

Special Rates for Organic Cereals

1. Unbranded organic cereals are exempt from tax.

2. Branded organic cereals are charged 5% GST.

How to Register for GST for Cereal Trading

If you are a trader or business dealing with cereals, registering for GST is essential. The process includes:

1. Visiting the GST portal (gst.gov.in).

2. Fill in business details and select the appropriate HSN code.

3. Upload the necessary documents like PAN, Aadhaar, and bank details.

4. Applying and obtaining the GSTIN.

Conclusion

The GST for cereals depends on whether they are raw, branded, or processed. While raw cereals are taxed at 0% GST, branded cereals carry 5% GST, and processed items bear higher tax charges up to 18%.
The awareness of the HSN Code of cereals and their corresponding GST rates is significant for business people, traders, and farmers to keep themselves updated with compliance and efficient business at lower costs. GST has brought uniformity of taxation, and the Indian cereal industry has reaped substantial benefits, particularly in the organized segment. Higher taxation on processed cereals can become a burden on food processing enterprises.
By being up-to-date on HSN Code categorizations and GST rates, stakeholders are better positioned to make informed decisions and maximize their tax outgo. For more insights, visit SWIPE or consult a GST professional.

FAQs

1. What is GST HSN Chapter 10?

Chapter 10 helps you understand the taxes that apply to various cereals and GST against each. Many cereals fall under Chapter 10, such as rice, wheat, barley, maize, etc.

2. What is the HSN code of cereals?

Cereal grains that have been processed in various ways (such as hulled, rolled, flaked, pearled, sliced, or kibbled), excluding rice classified under heading 1006; germ of cereals, whether whole, rolled, flaked, or ground.

3. Is there GST on cereal?

The supply of basic groceries, which includes most food and beverages marketed for human consumption, is zero-rated. However, certain categories of food and beverages such as candies, confectionery, and granola products (unless sold as breakfast cereals) are taxable.

4. What is the GST on packaged cereals?

The decision of the Indian government via notification No. 6/2022-Central Tax (Rate), dated July 13th, 2022, GST on rice and wheat and other specified commodities will be levied at the rate of 5% if they're sold in packaged containers.

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