Gst on agricultural produce

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 September 2017 Dear Experts,

We supply Green House produce i.e., Tomatoes, Capsicum and other Herbs by having packed with our company sticker to Big Hotels and other reputed Organizations. We have nearly 1 Crore of Turnover. We have applied for Trademark of our Brand under class 31 ,but that was objected. I have heard that Agricultural produce if it is packed and having registered trade mark then 5% GST is payable.

Please clarify my doubt as earlier as possible.

Querist : Anonymous

Querist : Anonymous (Querist)

11 September 2017 Please I am expecting a reply from GST experts in CAclubindia.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

26 July 2024 Under GST, the treatment of agricultural produce, especially when it is processed or branded, involves specific rules. Here’s a detailed explanation of how GST applies to your situation involving greenhouse produce like tomatoes, capsicum, and herbs:

### **1. GST Rate on Agricultural Produce**

**a. **Basic Exemption:**
- **Unprocessed Agricultural Produce:**
- Generally, unprocessed agricultural produce is exempt from GST. This includes raw fruits and vegetables, which are not processed or branded.

**b. **Processed or Branded Agricultural Produce:**
- **GST on Branded and Processed Produce:**
- When agricultural produce is processed, branded, or packaged, it may attract GST. Specifically, for goods like tomatoes, capsicum, and herbs, if they are processed and branded (especially if you have a registered trademark), the GST rate could apply.

### **2. GST Rate for Branded Agricultural Produce**

**a. **GST Rate for Branded Produce:**
- **Packaged Goods:**
- Packaged agricultural produce that is branded and sold with a registered trademark falls under the category of "processed agricultural produce." According to the GST rate schedule, branded and packaged agricultural produce is taxable at **5% GST**.

**b. **Goods under Class 31 (Trademark):**
- **Class 31:**
- Class 31 primarily covers agricultural products, including fresh fruits and vegetables, grains, and other unprocessed agricultural items. If your goods are branded and processed, this branding does not change the basic GST rate applicable to agricultural produce, but the processing and branding introduce the GST applicability.

### **3. Clarification on GST Applicability**

**a. **Branding and Processing:**
- **Branding Impact:**
- The fact that your agricultural produce is branded and packaged means it is subject to GST, and the rate is 5%. This is because branded and packaged goods are considered processed, even if the primary product is agricultural.

**b. **Registered Trademark:**
- **Trademark and GST:**
- Having a registered trademark does not directly influence the GST rate but reinforces that the produce is branded. The 5% GST rate is applicable irrespective of the trademark status, as long as the produce is packaged and branded.

### **4. Practical Steps for Compliance**

**a. **Issuing Invoices:**
- **GST on Sale:**
- When selling branded and packaged agricultural produce, issue invoices with 5% GST.

**b. **Reporting in Returns:**
- **GSTR-1:**
- Report sales of branded agricultural produce under the applicable HSN code with 5% GST in GSTR-1.
- **GSTR-3B:**
- Include the output GST liability at 5% for such sales in GSTR-3B.

**c. **Input Tax Credit (ITC):**
- **Claim ITC:**
- You can claim Input Tax Credit on the GST paid on inputs used for producing and packaging the branded produce, provided all conditions for ITC are met.

### **Summary**

- **Unprocessed Agricultural Produce:** Exempt from GST.
- **Processed/Branded Agricultural Produce:** Subject to 5% GST.
- **Trademark Status:** Branding and trademark registration do not alter the GST rate, which is governed by the nature of the product (branded and processed).

Ensure that you issue GST-compliant invoices and accurately report the sales and GST in your GST returns. For specific queries or complex scenarios, consulting with a GST expert or tax advisor is advisable to ensure compliance with the latest regulations and rates.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now