New 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.
New GST Rate on Sugar & Jaggery (Gur) in India
The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for sugar and jaggery (no compensation cess).
| Item | HSN Code | New GST Rate |
|---|---|---|
| Sugar (raw / white refined) | 1701 | 5% |
| Jaggery (gur) – loose / unbranded | 1701 | 0% (Exempt) |
| Jaggery (gur) – pre-packaged & labelled | 1701 | 5% |
| Sugar substitutes / artificial sweeteners* | Varies | 18% |
Note: Under the two-tier structure (5% / 18%), sugar remains at 5% while most sweeteners classify at 18%. *HSN for sweeteners depends on composition (e.g., chemical/artificial vs plant extracts). Final rates apply as per government notification.
What Is the New GST Rate on Sugar?
| 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 (0%) |
| Jaggery (branded & packaged) | 1701 | 5% |
Sugar (HSN 1701) is uniformly taxed at 5%; jaggery (gur) is exempt if loose/unbranded and 5% when pre-packaged & labelled.
New GST on Sugar Substitutes
| Product | GST Rate |
|---|---|
| Sugar (all types) | 5% |
| Jaggery (loose) | 0% (Exempt) |
| Jaggery (branded) | 5% |
| Sugar substitutes (aspartame, sucralose, stevia etc.) | 18% |
Classification tip: Artificial/chemical sweeteners are typically taxed at 18%; plant-based extracts can vary by composition. Use the precise HSN on the invoice.
What Is the GST Old Rate on Sugar?
(Old GST Rates – Applicable Until 21st September)
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.
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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.
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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.
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Old GST on Sugar Substitutes
(Old GST Rates – Applicable Until 21st September)
| 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
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What is the GST rate on sugar?The standard GST rate on sugar is 5%, whether loose or packaged.
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Is loose sugar exempt from GST?No. GST on loose sugar is also 5%, but small sellers below the threshold may not collect it.
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Is raw sugar taxed the same as refined sugar?Yes, both raw and refined sugars are taxed at 5% under GST.
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Does jaggery have GST?Unbranded jaggery is exempt, while branded or packaged jaggery attracts 5% GST.
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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.