New GST on Edible Oil: Tax Rates & Supply Chain Effect
Quick Summary
- The GST rate for most edible oils in India is set at 5%, making it consistent across different types like mustard, sunflower, and coconut oils.
- Oils used for industrial or cosmetic purposes are taxed at a higher rate of 18% under the GST system.
- HSN codes for edible oils range from 1507 to 1518, which helps in categorizing and applying the correct GST rate.
- The unified GST rate of 5% replaced varying state VAT rates, bringing more transparency to the pricing of edible oils.
- Businesses involved in the edible oil supply chain can claim Input Tax Credit (ITC) on costs like packaging and transportation, reducing their overall tax burden.
Edible oil is a kitchen staple found in every Indian household. From mustard and sunflower oil to palm and refined oils, they are widely consumed across the country. But how does the GST on edible oil affect the final price you pay at the store? In this blog, we’ll explore the applicable cooking oil HSN codes and gst rates , impact on pricing, and how the tax affects both manufacturers and retailers in the supply chain.
Book A Demo
Is GST Applicable on Edible Oils?
Yes. Edible oils are taxable under GST in India. Common cooking oils such as soybean oil, groundnut oil, olive oil, palm oil, sunflower oil, coconut oil, mustard oil, and edible blended oils generally attract 5% GST under the applicable Chapter 15 headings. There is no compensation cess on these common edible oil entries.
New GST Rate on Edible Oils in India
For most edible oils, the GST rate remains 5%. The common edible oil headings under Chapter 15 generally remain in the 5% GST slab. So, for this category, the practical position is that the rate remains the same before and after 22 Sep 2025.
GST Rate on Different Types of Edible Oils
| Type of Oil | Common HSN Code | New GST Rate (After 22 Sep 2025) |
Old GST Rate (Before 22 Sep 2025) |
|---|---|---|---|
| Soybean Oil | 1507 | 5% | 5% |
| Groundnut Oil | 1508 | 5% | 5% |
| Olive Oil | 1509 | 5% | 5% |
| Palm Oil | 1511 | 5% | 5% |
| Sunflower Oil | 1512 | 5% | 5% |
| Coconut Oil | 1513 | 5% | 5% |
| Mustard / Rape / Colza Oil | 1514 | 5% | 5% |
| Other fixed vegetable oils | 1515 | 5% | 5% |
| Vegetable fats and oils partly or wholly hydrogenated | 1516 | 5% | 5% |
| Edible mixtures or preparations of vegetable fats or oils | 1517 | 5% | 5% |
(After 22 Sep 2025) 5%
(Before 22 Sep 2025) 5%
(After 22 Sep 2025) 5%
(Before 22 Sep 2025) 5%
(After 22 Sep 2025) 5%
(Before 22 Sep 2025) 5%
(After 22 Sep 2025) 5%
(Before 22 Sep 2025) 5%
(After 22 Sep 2025) 5%
(Before 22 Sep 2025) 5%
(After 22 Sep 2025) 5%
(Before 22 Sep 2025) 5%
(After 22 Sep 2025) 5%
(Before 22 Sep 2025) 5%
(After 22 Sep 2025) 5%
(Before 22 Sep 2025) 5%
(After 22 Sep 2025) 5%
(Before 22 Sep 2025) 5%
(After 22 Sep 2025) 5%
(Before 22 Sep 2025) 5%
HSN Codes for Edible Oils
Edible oils fall under HSN codes ranging from 1507 to 1518, depending on the source of the oil.
| Oil Type | HSN Code | GST Rate |
|---|---|---|
| Soybean Oil | 1507 | 5% |
| Groundnut Oil | 1508 | 5% |
| Olive Oil | 1509 | 5% |
| Sunflower Oil | 1512 | 5% |
| Palm Oil | 1511 | 5% |
| Coconut Oil | 1513 | 5% |
| Industrial Use Oils | 1516, 1517, etc. | 18% |
How to Calculate GST on Edible Oils
For most edible oils, GST is calculated at 5%.
The formula when the price is before GST
GST Amount = Taxable Value × 5%
Invoice Value = Taxable Value + GST Amount
Example 1: Mustard Oil
Suppose the taxable value of mustard oil is Rs 2,000.
GST = 2,000 × 5% = Rs 100
Final Invoice Value = Rs 2,100
Example 2: Sunflower Oil
Suppose the taxable value of sunflower oil is Rs 5,000.
GST = 5,000 × 5% = Rs 250
Final Invoice Value = Rs 5,250
Formula when price is inclusive of GST
If the price already includes GST:
Taxable Value = GST Inclusive Price ÷ 1.05
GST Amount = GST Inclusive Price - Taxable Value
Example 3: Coconut Oil sold at inclusive price
Suppose coconut oil is sold for Rs 1,050, inclusive of GST.
Taxable Value = 1,050 ÷ 1.05 = Rs 1,000
GST Amount = 1,050 -1000 = Rs 50
Impact of GST on Cooking Oil Prices
GST helped standardise the tax structure across states for edible oils. However, the final retail price of cooking oil is still influenced by factors such as raw material cost, import dependence, transport, packaging, and processing. Businesses registered under GST can generally claim input tax credit on eligible inward supplies, which helps reduce tax cascading in the supply chain.
Input Tax Credit (ITC) on Edible Oils
Manufacturers, wholesalers, and retailers of edible oils can claim ITC on the GST paid for:
- Packaging materials
- Transportation services
- Machinery and production equipment
- Marketing and promotional expenses
This helps businesses reduce tax liability, though ITC is not available if the oils are used for personal consumption or exempt supplies.
Conclusion
The GST on edible oil stands at a standard 5%, making it relatively affordable for end consumers while maintaining tax compliance for businesses. Whether you’re a manufacturer, distributor, or retailer, understanding the correct cooking oil GST rate, HSN codes, and ITC rules ensures transparency and efficiency in the supply chain. With edible oils being essential products, accurate GST application is key to cost control and customer trust.
