Why Are Millet Biscuits Taxed but Millet Powder Isn’t?
India’s push for millets—dubbed Shree Anna—has made them a kitchen staple and a government priority. But when it comes to GST, not all millet-based products are treated equally.
In this blog, we break down why GST on millet products like biscuits and powders varies, what the law says, and what small businesses should watch out for.
GST Classification: Natural vs. Processed Millet Goods
The current tax disparity boils down to how a product is classified under GST:
| Product Type | GST Rate | Reason |
|---|---|---|
| Millet Powder | 0% | Considered unbranded and in natural form (Chapter 11, HSN 1103/1106) |
| Millet Biscuits | 18% | Classified as processed food/snacks (Chapter 19, HSN 1905) |
| Branded Millet Mix | 5% / 18% | Depends on ingredients and packaging |
The GoM (Group of Ministers) on GST rate rationalisation is currently reviewing this anomaly to bring parity in tax treatment of food items, especially when millet is promoted as a healthy staple by the government.
Legal & Policy Basis
- As per Notification No. 2/2017-Central Tax (Rate), food grains, flours, and cereals remain exempt if sold unbranded and unpacked.
- But once it is processed, branded, or packaged, GST kicks in.
CBIC Clarification (via FAQs and Circulars):
“Millet-based biscuits are processed items, falling under HSN 1905, hence attract 18% GST.”
Why This Matters for Small Businesses & Sellers
If you’re a millet brand or FPO, classification impacts your:
- Pricing strategy
- Input tax credit eligibility
- Customer perception on “healthy” yet “taxed” items
Tip from Efiletax Experts:
“Get your HSN classification validated before launching a millet-based product. One wrong code can attract litigation or demand notices.”
What to Expect from the GoM Review?
The GoM’s upcoming review may:
- Rationalise GST rates on health-focused food items
- Bring clarity between basic millets vs. value-added products
- Provide a uniform rate for millet-based goods to boost domestic consumption and exports
Summary
Millet powder is exempt from GST as a natural product, but millet biscuits attract 18% tax due to their processed classification. The GoM may soon rationalise this disparity in GST on millet products.
FAQ Section
Q1. Why is millet powder exempt from GST?
Because it’s unprocessed and unbranded, falling under food grains category in Chapter 11.
Q2. Why do millet biscuits attract 18% GST?
They are treated as processed food items (like cookies/snacks) under HSN 1905.
Q3. Will the GST rates change soon?
The GoM is reviewing food product classifications. Changes may follow based on their report.
Q4. How can sellers ensure correct GST compliance?
Classify products correctly using HSN codes, consult a tax expert, or use Efiletax services.
Closing CTA
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