New GST on Ghee: Branded vs Loose Categories
- The GST rate on ghee in India will be reduced from 12% to 5% for both branded and loose ghee starting September 22, 2025.
- There is no GST exemption for loose or unbranded ghee; all ghee is taxed at the same rate.
- The HSN code for all types of ghee, including branded, loose, and sold by dairies, is 0405.
- Businesses must register for GST if annual turnover exceeds ₹40 lakhs and use the correct HSN code on invoices.
- Input Tax Credit can be claimed by businesses on costs like packaging and logistics to reduce net tax liability.
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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New GST Rate on Ghee in India
The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for ghee (no compensation cess).
The gst rate on ghee is:
- 5% (uniform for both branded and unbranded products)
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 5% GST rate under the updated slabs.
| Ghee Type | HSN Code | New GST Rate |
|---|---|---|
| Branded ghee (any pack size) | 0405 | 5% |
| Loose/desi ghee sold by weight | 0405 | 5% |
| Ghee sold by dairies/co-ops | 0405 | 5% |
Ghee Type
HSN Code
New GST Rate
Ghee Type
HSN Code
New GST Rate
Ghee Type
HSN Code
New GST Rate
Note: This reflects the rationalisation where the prior 12% slab is discontinued and mapped to 5% for eligible goods.
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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Old GST Rate on Ghee
(Old GST Rates – Applicable Until 21st September)
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% |
Ghee Type
HSN Code
GST Rate
Ghee Type
HSN Code
GST Rate
Ghee Type
HSN Code
GST Rate
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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%.
