For the purposes of Goods and Services Tax, fresh produce is not subject to taxes, but frozen produce is. It may seem simple at first glance, but reading the whole article will help you grasp its nuances. This article will inform you all about GST on Fruits and Vegetables.
In what ways do fruits and vegetables incur GST taxation?
Based on its nature and origin, the whole tax system may be broken down into the four categories below.
- NIL (0%)
- 5% taxed
- Subject to a 12% Tax
- At a rate of 18%
Rate of 0%
The following items qualify as GST Zero-Rated Products:
- Root and tuber vegetables, such as onions, potatoes, tomatoes, garlic, cabbage, cauliflower, carrots, beets, etc., that have not been processed or refrigerated.
- Fruits that have just been harvested, such as apples, bananas, coconuts, cherries, mangoes, peaches, pineapples, guavas, and citrus fruits like mandarin oranges, grapefruits, and more.
- Walnuts, almonds, hazelnuts, pistachios, kola nuts, areca nuts, and other fresh nuts Macadamia nuts, pistachios, and pistachios
- The goods and services tax (GST) exemption applies to all of the aforementioned produce. Fruits and vegetables purchased directly from a farmer, dealer, or merchant are likewise free from GST.
Produce subject to a 5% Goods and Services Tax
These products are included in the 5% GST Slab:
- All forms of herb (including dried flower (Jari booti) and plant roots and bark) are subject to a 5% GST.
- There is a 5% GST on all frozen fruits and vegetables, regardless of whether they have been boiled in water, cooked, uncooked, or if they have additional sugar and sweetening materials.
- Dried areca nuts, with the shells removed.
- Some perishable produce and pantry staples that have been kept for later use.
- Additional pickled veggies
All of the above are subject to GST at the 5% tax rate, which also applies to the vast majority of conserved fruits and vegetables.
12 percent-taxed items
- Fresh or dried, shelled or unshelled, fruits that don’t need to be rehydrated.
- liquids made from various fruits and vegetables.
- The previous tax rate on dry fruits was only 5%, therefore the new 12% tax rate has resulted in a significant increase in the cost of buying dry fruits.
18% GST
As part of GST, the following are taxed at 18%:
- Under GST, the tax rate for spreads such as jelly, fruit jam, paste, and nut puree is 12%.
- Foods and plants that have been preserved using sugar, acetic acid, or vinegar.
- Tomatoes, mushrooms, and other crops have unique storage requirements
- Previously charged at a flat rate of 5% under several VAT Acts, these foods are now included in the 18% GST slab. As a result, the adjustments caused substantial price increases for many commodities.
Conclusion
In conclusion, a beneficial effect of GST registration for the agriculture sector is the exemption of fresh and unprocessed fruits and vegetables from the GST rates paid on such items under certain situations. However, dried fruits and preparation from fruits and vegetables, which were taxed at a rate of 5% before, now face higher rates of 12% and 18%, having a detrimental effect on FMCG Companies. Products previously taxed at a rate of 5% will now be taxed at 12% or 18%, resulting in a price rise and a drop in consumption, which has a big impact on final consumers due to the total Goods and Services Tax rate.
If you want any other guidance related to GST Registration or GST Return filing, please feel free to talk to our business advisors at 8881-069-069.
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