Food & BeverageFMCG & Processing

GST on Food Processing — Fresh 0%, Packaged 5%, Processed 12-18%, Drinks 28%

Complete GST guide for food industry: fresh produce (0%), pre-packaged staples (5% since July 2022), processed foods (12%), ready-to-eat/frozen (18%), carbonated beverages (28%+12% cess), restaurant services (5%), dairy products, and the packaging/branding threshold that determines taxability.

0%

Fresh/Unprocessed

5%

Essential Packaged

12%

Processed Food

18%

Ready-to-Eat

28%+Cess

Carbonated Drinks

0%

Dairy (Milk/Curd)

18%

Frozen Food

12%

Fruit Juice (100%)

Food Processing — GST Framework

Fresh & Unprocessed — 0% (Exempt/Nil)

Fresh agricultural produce sold in original/unprocessed form: NIL GST. Includes: fresh fruits, vegetables, cereals, pulses, milk (not ultra-pasteurized), eggs, fresh meat/fish (not frozen/canned), live animals, fresh flowers, sugarcane, raw honey, fresh coconut water. Key condition: no processing beyond cleaning, sorting, grading, drying, dehusking. Once 'branded' or put in 'unit container' — may attract 5%. Farmers selling own produce: fully exempt (agricultural services exemption).

Branded & Pre-Packaged Food — 5%

From July 18, 2022 (47th Council): Pre-packaged and labelled food items (that earlier were exempt) now attract 5% GST. This includes: rice, wheat, flour (atta), pulses, curd, lassi, paneer, honey, jaggery, puffed rice (murmura) — WHEN sold pre-packaged and labelled under Legal Metrology Act (packages ≤25 kg/25 litre). Loose/unbranded: still 0%. This was a major change — items that were exempt since GST launch became taxable when sold in retail packaging. Branded namkeen/bhujia: 12%.

Processed Food — 12% Category

Moderately processed foods: 12% GST. Includes: fruit juice (100% juice), namkeens/snacks (branded), processed meat/fish (not frozen), pickles, murabba, chutney, sauces (ketchup, soy sauce), instant food mixes (idli batter, dosa mix), condensed milk, butter, cheese (natural), ghee, fruit jam/jelly, maple syrup. This is the 'value addition' bracket — food that's significantly transformed from raw state but not fully ready-to-eat. Papad (any variety): 0% regardless of packaging.

Ready-to-Eat & High-Value — 18%

Fully processed, ready-to-eat/drink items: 18%. Includes: frozen food (ready-to-eat frozen meals, frozen pizza), pasta (cooked), soups (packaged), chocolate, cocoa products, ice cream, waffles, instant coffee, sugar confectionery, biscuits (if >₹100/kg — post 53rd council), cakes (bakery), pastries, mineral/aerated water (plain), energy drinks, protein supplements, chewing gum, corn flakes, muesli. Also: food served in AC restaurants (without ITC option).

Beverages & Sin Goods — 28% + Cess

Aerated/carbonated drinks: 28% GST + 12% Compensation Cess = 40% effective. Includes: Coca-Cola, Pepsi, Sprite, Fanta, all carbonated beverages. Tobacco products: 28% + cess (varies). Pan masala: 28% + cess. Caffeinated beverages: 28% + 12% cess (energy drinks). Fruit-based drinks (<100% juice with carbonation): 28%. 100% fruit juice (Tropicana, Real): 12%. Coconut water (packaged): 12%. Buttermilk (packaged): 12%. Tender coconut (fresh): 0%.

Restaurant vs Packaged Food

Restaurant food: 5% without ITC (for non-AC restaurants/takeaway). AC restaurants: 5% (earlier 18% with ITC — changed in 23rd Council). Outdoor catering: 18% with ITC. Hotel restaurant (room tariff ≥₹7,500): 18% with ITC option. Canteen/mess (industrial): 5%. Cloud kitchen via aggregator: 5%. Packaged food from same restaurant (sold as FMCG product): applicable goods rate (5/12/18%). Sweets from mithai shop (made and sold): 5% (restaurant service). Sweets pre-packed for retail: goods classification (5-18%).

Food Processing — GST Rate Table

ItemHSNGST RateNotes
Fresh fruits & vegetables0701-08100%Unprocessed, loose
Milk, eggs, fresh meat/fish0401/0407/03010%Fresh, unpackaged
Rice/wheat/atta (pre-packaged ≤25kg)1006/1001/11015%Since July 2022
Curd/paneer/honey (pre-packaged)0403/0406/04095%Under Legal Metrology
Fruit juice (100%)200912%Not carbonated
Namkeens/snacks (branded)210612%Packaged snack foods
Cheese, butter, ghee0406/040512%Dairy processed
Frozen food (ready-to-eat)1602/210618%Frozen meals/pizza
Chocolate/confectionery1806/170418%All varieties
Ice cream210518%All flavors
Carbonated soft drinks220228%+12% cessAerated beverages
Restaurant food service99635%Without ITC

Frequently Asked Questions

Why did pre-packaged food items become taxable from July 2022?
The 47th GST Council (June 2022) removed the exemption for pre-packaged and labelled food items to address tax evasion and create a level playing field. Previously: branded items (with registered trademark) were taxed at 5%, but unbranded items were exempt — leading to companies deliberately NOT registering trademarks to avoid GST. New rule: ANY food item sold in a 'pre-packaged commodity' under Legal Metrology Act (retail packages ≤25 kg) attracts 5% — regardless of brand. Loose/unpackaged: still 0%. Packages >25 kg: 0% (considered wholesale/bulk).
What is the GST on restaurant food — is it 5% or 18%?
Most restaurants: 5% GST WITHOUT ITC (Input Tax Credit). This is the default rate after the 23rd Council meeting (Nov 2017). Breakdown: (1) Non-AC restaurants: 5% without ITC. (2) AC restaurants: 5% without ITC (reduced from 18%). (3) Takeaway/delivery: 5%. (4) Star hotels with room tariff ≥₹7,500: can CHOOSE 18% with ITC or 5% without ITC. (5) Outdoor catering services: 18% with ITC (reduced from earlier — was 18%, briefly 5%, now 18% again for pure catering contracts). (6) Food delivery via Swiggy/Zomato: 5% (aggregator pays).
Is there GST on milk and dairy products?
Fresh milk: 0% (completely exempt — loose or packaged). UHT/ultra-pasteurized milk (Amul Taaza, etc.): 0%. Curd (loose): 0%. Curd/lassi/buttermilk (pre-packaged ≤25kg): 5% (since July 2022). Paneer (loose): 0%. Paneer (pre-packaged): 5%. Cheese: 12%. Butter: 12%. Ghee: 12%. Condensed milk: 12%. Flavored milk: 12%. Ice cream: 18%. Milk powder: 5%. Infant milk food (baby formula): 5%. Skimmed milk powder: 5%. Key distinction: degree of processing determines rate — more processed = higher rate.
How is GST on carbonated drinks calculated with cess?
Carbonated/aerated drinks face the HIGHEST effective GST in food category: Base GST: 28% (14% CGST + 14% SGST). Compensation Cess: 12% (additional). Total effective rate: 40% on MRP/transaction value. Example: Coca-Cola bottle priced at ₹100 → GST component = ₹28 (28%) + ₹12 (cess) = ₹40 tax. For manufacturers: full ITC available on inputs (sugar, water, packaging, machinery). The high rate is 'sin tax' logic — discouraging unhealthy consumption. Fruit-based carbonated drinks: also 28%+12% cess. 100% fruit juice (no carbonation): only 12%. Fresh sugarcane juice: 12% (if packaged) or 0% (if freshly squeezed at stall).

Food Industry Billing — Multi-Rate HSN Auto-Classification

Laabam.One auto-classifies food products across 0/5/12/18/28% slabs using HSN code lookup, handles pre-packaged vs loose distinction, restaurant composite supply, and compensation cess calculation for beverages.

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