GST ON NON BRANDED TUMERIC POWDER

Under the Goods and Services Tax (GST) framework in India, the taxability and registration requirements for your scenario can be broken down as follows:

1. Purchase from Farmers

• Exemption for Farmers: Farmers are generally considered "agriculturists" who supply agricultural produce (such as raw or dried whole turmeric) out of the cultivation of land. Such supplies by farmers are typically exempt from GST, and the farmers themselves are not required to register for GST for these sales.

• Reverse Charge Mechanism (RCM): Previously, there were provisions requiring registered buyers to pay GST under the Reverse Charge Mechanism on purchases from unregistered dealers. However, these specific provisions for RCM on general goods (under Section 9(4) of the CGST Act) have been largely suspended/limited to specific notified classes of registered persons and goods. As of now, you are generally not required to pay RCM on standard agricultural produce purchased from farmers.

2. Sale of Turmeric Powder

• Taxable Product: Unlike raw or whole turmeric (which may be treated as agricultural produce), turmeric powder is considered a processed product.

• GST Rate: Turmeric powder is subject to 5% GST.

• Registration Liability: If you are a trader who buys whole turmeric, processes it into powder (or buys powder to resell), and sells it, you are making a taxable supply.

  • Threshold Limit: You are required to obtain GST registration if your aggregate annual turnover exceeds the prescribed threshold (typically ₹40 lakhs for most states, or ₹20 lakhs for certain special category states).

  • Mandatory Registration: If your turnover is below the threshold, you are not strictly required to register. However, once you register, you must collect and pay 5% GST on your sales of turmeric powder.

3. Summary of Compliance

• Input Tax Credit (ITC): If you purchase whole turmeric from a farmer (at 0% GST) and sell it as powder (at 5% GST), you will not have any ITC from the purchase of the raw material. You will, however, be able to claim ITC on the GST paid on other business expenses, such as electricity, packaging materials, or machinery, provided you are a registered taxpayer.

• Documentation: Even if you are not liable for GST (due to being below the threshold), it is professional and prudent to maintain proper records of all your purchases (from farmers) and sales. If you are registered, you must issue proper tax invoices for all your sales.

Recommendation:

Because GST rules can vary based on your specific state, the exact nature of your "retail" processing, and your total annual turnover, it is advisable to consult with a local chartered accountant or tax professional. They can help you determine if your specific volume of business triggers the mandatory registration threshold and ensure your invoices and accounting align with current GST notifications.

Summary

• Purchase: Purchasing whole turmeric from farmers is generally exempt from GST for both the farmer and the buyer; RCM usually does not apply to these agricultural purchases.

• Sale: Selling turmeric powder is a taxable supply subject to 5% GST.

• Registration: You must register for GST only if your total annual turnover exceeds the state-specific threshold (typically ₹20–40 lakhs). If you are below this, registration is optional, but you must register if you wish to claim Input Tax Credit on your business expenses.