GST Parity on Nuts A Boost for India’s Food Processing Sector
India’s food processing sector has long sought GST parity on nuts—particularly between processed and unprocessed forms. The issue isn’t just about tax classification; it affects MSMEs, pricing, exports, and consumer access to healthy foods. With rising awareness around nutrition and value-added processing, uniform GST rates are more important than ever.
Why GST Parity on Nuts is a Game-Changer
At present, nuts like cashews, almonds, walnuts, and groundnuts face differential GST rates depending on whether they’re shelled, roasted, salted, or otherwise processed. Here’s how this hurts the industry:
Current GST Rates on Nuts
| Type of Nut | Raw (Unshelled) | Shelled | Roasted/Processed | GST Impact |
|---|---|---|---|---|
| Cashew | 5% | 12% | 18% | High burden on value-added products |
| Almond/Walnut (in shell) | Nil | 5% | 12%–18% | Higher rate discourages processing |
| Groundnuts (raw) | 5% | 5% | 12% | Uniform on raw, gap in processed |
- Source: CBIC rate notifications and GST Council decisions
Issues Faced Due to Rate Disparity
- Hurts MSME processors who work on roasting, salting, or packaging
- Increases compliance costs due to classification disputes
- Reduces competitiveness of Indian products in global export markets
- Contradicts Make in India push by taxing local processing more than imports
Case Insight
The Gujarat High Court in Bharat Traders vs UOI (2023) ruled in favour of a uniform rate on roasted groundnuts, holding that arbitrary classification under higher tax brackets violated Article 14 of the Constitution.
Industry Demands & Policy Recommendations
- Uniform GST of 5% or 12% for all forms of nuts (raw and processed)
- Simplified HSN codes to avoid litigation and confusion
- Exempt basic value addition (like roasting/salting without flavouring) from higher tax
Expert Tip:
“Processing is value creation, not luxury. Higher GST on packaged nuts penalises Indian MSMEs who add nutritional value and shelf life.” — CA Nirmal Joshi, GST Consultant
How GST Parity Helps India’s Agro Economy
- Encourages rural processing hubs
- Improves farmer income via direct procurement by processors
- Boosts exports with consistent, globally competitive pricing
- Reduces wastage by incentivising proper storage and packaging
The Road Ahead
The GST Council is expected to review food product classifications in its upcoming meeting. MSME food processors, exporters, and even health advocates are pushing for GST parity on nuts to ensure fair taxation and promote India’s agri-processing goals under the PMKSY scheme.
Summary
GST parity on nuts helps India’s food processing sector by easing tax burdens on MSMEs, boosting exports, and promoting nutrition. A uniform GST rate on raw and processed nuts can reduce disputes, support rural industry, and align with India’s Make in India goals.
FAQs
Q1. What is GST parity on nuts?
It means applying the same GST rate on both raw and processed forms of nuts to avoid classification disputes and tax burdens.
Q2. Why are roasted or salted nuts taxed higher?
They are treated as “processed food,” often attracting 12%–18% GST, unlike raw forms taxed at 5% or nil.
Q3. What are the implications for exporters?
Differential rates complicate pricing and reduce global competitiveness of Indian nut-based products.