Paddy HSN Code: Understanding the Classification of Paddy and Rice
Paddy is the raw form of rice that still has its husk. In GST it is treated as an important food grain. Correct use of the paddy HSN code helps farmers, millers and traders show their sales and purchases in a proper way.
Paddy and rice are covered in Chapter 10 of the Customs Tariff. The main heading is 1006 which includes paddy in husk, husked rice and milled rice meant for human use.
HSN and GST Rate Table for Paddy and Rice
| HSN Code | Product Name | Product Description | Product Type or Variant | GST Rate |
|---|---|---|---|---|
| 1006 | Paddy in husk | Unmilled rice with husk purchased from farmers or mandis | Food grain in primary form | 0% |
| 1006 | Rice milled | De husked or polished rice sold in packs for human use | Packed and branded rice for retail | 5% |
Classification of Rice Paddy under HSN Code
Under heading 1006, paddy in husk and rice after milling are classified based on how much processing is done. If the grain still has its husk and is only cleaned and dried, it is treated as paddy. Once the husk is removed and the grain is polished, it is shown as rice.
Farmers and mandi traders normally sell paddy under the same heading while rice mills record purchases of paddy and sales of rice separately. This clear use of HSN makes stock and tax records easy to understand.
GST Implications for Paddy Farming and Cultivation
Most direct supplies of paddy by farmers are exempt from GST when conditions in the law are met. This reduces the compliance burden on small farmers and keeps grain prices stable for consumers.
Rice sold in consumer packs with a brand name can attract GST if it falls under notified conditions. Unbranded or loose rice for household use may get full or partial relief. The HSN stays the same but the tax rate can depend on packing and branding.
The Role of HSN Code in Taxation for Paddy and Rice Products
Correct paddy HSN code helps you show values properly in GSTR 1 and GSTR 3B, in e way bills and in export or purchase reports. When paddy and rice are mapped to heading 1006 in a consistent manner, it becomes easier to answer any query from the department.
Rice mills and grain traders should update their billing software so that every item of paddy and rice carries the correct HSN. This avoids interest and penalty that can arise from wrong classification.
As a Chartered Accountant with more than 8 years of experience, I have refined my skills in the field and developed a true passion for writing. I specialize in creating insightful content on topics such as GST, income tax, audits, and accounts payable. By focusing on delivering information that is both engaging and informative, I aim to share valuable insights that resonate with readers.
Frequently Asked Questions
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What is the HSN code for paddy?
The general HSN code for paddy in husk is 1006. It covers paddy as well as rice in various processed forms under the same heading.
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How is rice paddy classified under HSN?
Rice paddy is classified under Chapter 10 and heading 1006. Whole grain in husk is treated as paddy while husked or polished grain is shown as rice under the same heading.
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Does GST apply to paddy cultivation and rice farming?
Supplies of paddy by farmers are usually exempt when legal conditions are met. GST can apply later in the chain when branded rice is packed and sold for final consumption.
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Are all paddy related products classified under the same HSN code?
Most products that remain in the form of paddy or rice use heading 1006. If rice is converted into processed foods like flakes or ready mix items, a different HSN may apply.
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How does the HSN code impact paddy farming taxation?
Correct use of HSN ensures that exempt supplies are shown correctly and taxable supplies carry the right rate. This protects farmers and traders from disputes on GST during assessment.