GST on Sugar: Raw vs Processed Tax Rates
Sugar is a common ingredient in every Indian kitchen and a major component in food processing industries. But how does GST affect its pricing? Whether you’re a consumer, retailer, or in the food business, knowing the gst on sugar helps you stay informed and compliant.
BOOK A FREE DEMO
What Is the GST Rate on Sugar?
Sugar is taxed under the Goods and Services Tax (GST) system based on its form—raw or processed.
| Type of Sugar | HSN Code | GST Rate |
|---|---|---|
| Raw sugar | 1701 | 5% |
| White refined sugar | 1701 | 5% |
| Processed sugar (packaged and branded) | 1701 | 5% |
| Jaggery (gur) – not branded | 1701 | Exempt |
| Jaggery (branded & packaged) | 1701 | 5% |
The standard gst rate on sugar is 5%, which applies to both loose and packaged sugar unless specifically exempted.
Get a Free Trial – Best Accounting Software For Small Business
GST on Loose Sugar
- GST on loose sugar is 5%, just like packaged sugar.
- Some local sellers may sell sugar without GST if their turnover is below ₹40 lakhs.
- Most retailers and wholesalers dealing in bulk must charge 5% GST.
Get a Free Trial – Best GST Accounting Software For Small Business
GST Impact on the Sugar Industry
- Simplified tax: replaced VAT and excise duties
- Input Tax Credit allowed on machinery, packaging, etc.
- Uniform pricing and compliance across states
Sugar in Food Processing and Beverages
If you’re in the food or beverage industry, sugar is treated as a raw material. You pay 5% GST and can claim Input Tax Credit on it if registered.
For example, biscuit makers, juice producers, and sweet shops using sugar can offset this tax.
Get a Free Demo – Best Billing and Invoicing Software
GST on Sugar Substitutes
| Product | GST Rate |
|---|---|
| Sugar (all types) | 5% |
| Jaggery (loose) | 0% (Exempt) |
| Jaggery (branded) | 5% |
| Sugar substitutes (aspartame, sucralose, stevia) | 18% |
So if you’re a diabetic or health-conscious buyer opting for substitutes, be aware of the higher tax.
Conclusion
Understanding how gst on sugar works helps not just households but also traders, manufacturers, and food businesses handle costs better and follow the right billing practices.
I am a Chartered Accountant with 5 years of experience specializing in GST, income tax, and HSN code classification. I help businesses with GST compliance, tax planning, and financial advisory, ensuring they meet regulatory requirements while optimizing their tax strategies. I aim to simplify GST filings, income tax laws, and HSN code classifications, helping professionals and business owners stay informed and compliant.
Frequently Asked Questions (FAQs)
- What is the GST rate on sugar?The standard GST rate on sugar is 5%, whether loose or packaged.
- Is loose sugar exempt from GST?No. GST on loose sugar is also 5%, but small sellers below the threshold may not collect it.
- Is raw sugar taxed the same as refined sugar?Yes, both raw and refined sugars are taxed at 5% under GST.
- Does jaggery have GST?Unbranded jaggery is exempt, while branded or packaged jaggery attracts 5% GST.
- Can businesses claim ITC on sugar used for manufacturing?Yes. Businesses registered under GST can claim Input Tax Credit (ITC) on sugar used in production.
