GST on Ghee: Branded vs Loose Categories
Ghee is a staple in Indian households, used in cooking, religious rituals, and Ayurvedic medicine. But when it comes to pricing and taxation, many are unsure about the GST impact. Whether you’re a buyer or a dairy business, understanding the gst on ghee helps with pricing and compliance.
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What is Ghee?
Ghee, also known as clarified butter, is made by simmering butter to remove water and milk solids. It is:
- Used in daily cooking and sweets
- Sold in branded jars, loose tins, or bulk packs
- Offered by both local dairies and large FMCG brands
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GST Rate on Ghee
The gst rate on ghee is:
- 12% (uniform for both branded and unbranded products)
Yes, you read that right—there is no GST exemption for loose or unbranded ghee. All ghee, whether sold in small sachets or large tins, is taxed at a flat 12% GST rate.
| Ghee Type | HSN Code | GST Rate |
|---|---|---|
| Branded ghee (any pack size) | 0405 | 12% |
| Loose/desi ghee sold by weight | 0405 | 12% |
| Ghee sold by dairies/co-ops | 0405 | 12% |
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GST on Desi Ghee
Desi ghee, whether made from cow milk or buffalo milk, is not exempt from GST.
- gst on desi ghee is also 12%
- There is no special rate or exemption based on animal source or traditional preparation methods
- So even hand-churned or farm-produced ghee attracts the same GST rate
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Ghee Sellers: GST Compliance Tips
- GST registration is mandatory if annual turnover exceeds ₹40 lakhs (₹20 lakhs for services)
- Mention the correct Ghee HSN code 04059020 on invoices
- Charge 12% GST on all sales, whether loose or packed
- File monthly or quarterly returns as per your category
- Claim Input Tax Credit on packaging materials, logistics, and marketing expenses
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GST Impact on Ghee Pricing
Since ghee attracts 12% GST, the final price includes this tax—especially for consumers buying packaged goods. For businesses, Input Tax Credit (ITC) helps reduce net tax liability.
- Base price: ₹100
- GST @12%: ₹12
- Total: ₹112
Businesses can claim that ₹12 as input credit if the ghee is used for resale or production.
Conclusion
Knowing how gst on ghee is calculated helps both buyers and sellers stay tax-compliant. Whether you’re buying branded packets or selling loose ghee, remember—the GST rate remains the same at 12%.
As a Chartered Accountant with over 18 years of experience, I have honed my skills in the field and developed a genuine passion for writing. I specialize in crafting insightful content on topics such as GST, income tax, audits, and accounts payable. By focusing on delivering information that is both engaging and informative, my aim is to share valuable insights that resonate with readers.
Frequently Asked Questions (FAQs)
- What is the GST rate on ghee in India?The GST rate on ghee is 12%, regardless of packaging or brand.
- Is desi ghee exempt from GST?No. The GST on desi ghee is also 12%, same as branded ghee.
- What is the HSN code for ghee under GST?The HSN code is 0405, which includes butter and ghee.
- Can small dairies selling loose ghee avoid GST?Only if their turnover is below the GST registration threshold. Otherwise, they must charge and pay 12% GST.
- Can businesses claim ITC on ghee purchases?Yes, if the ghee is purchased for resale or business use, ITC can be claimed on the GST paid.
