HSN Code for Bakery Products, Sweets & Namkeen – GST Rates Explained
Running a bakery, sweet shop, or namkeen business in India is a rewarding venture, but navigating the maze of GST compliance can be challenging. One of the biggest hurdles? Figuring out the correct HSN code for bakery products. This simple code determines the GST rate you charge, impacts your tax filings, and is crucial for maintaining a compliant business. Whether you’re a small bakery owner, a home-based sweet maker learning How to Start a Home-Based Bakery Business in India, or a namkeen manufacturer, this guide will simplify the complex world of HSN codes and the applicable GST rates for bakery products in India, ensuring you stay on the right side of the law.
What is an HSN Code and Why is it Crucial for Your Business?
Before diving into specific products, it’s essential to understand the basics of the HSN system. Misclassifying a product can lead to significant financial and legal complications, so getting this foundational knowledge right is the first step toward seamless GST compliance.
Decoding HSN: The Harmonized System of Nomenclature Explained
The Harmonized System of Nomenclature, or HSN, is a globally recognized system for classifying goods. Developed by the World Customs Organization (WCO), it acts as a universal language for trade, allowing countries to classify products in a uniform manner. In India, this system was adopted into the Goods and Services Tax (GST) framework to create a systematic and logical method for identifying products for tax purposes. Every product has a unique HSN code, which helps in determining the GST rate applicable to it and simplifies the process of filing GST returns, a process detailed in our How to File GST Returns Online: A Step-by-Step Guide of the GST Filing Process & Procedure. For a deeper dive into the structure of these codes, you can read our detailed guide on What is an HSN/SAC Code?.
Why Correct HSN Classification Matters
Choosing the right HSN code isn’t just an administrative task; it’s a critical compliance requirement with real-world consequences. An incorrect HSN classification for sweets and namkeen or any other product can disrupt your business operations significantly. Here’s why it is so important:
- Incorrect GST Rate Calculation: The primary purpose of an HSN code in the GST regime is to determine the tax rate. Using the wrong code means you might charge the wrong GST rate—either overcharging your customers or underpaying the government, both of which create major problems.
- Penalties and Legal Notices: If a tax audit reveals that you have been using an incorrect HSN code and consequently paying a lower tax rate, the tax department can issue notices and impose heavy penalties, often including the tax deficit plus interest.
- Input Tax Credit (ITC) Disputes: Correct HSN codes on your invoices are necessary for your B2B customers to claim Input Tax Credit seamlessly. Mismatched codes can lead to disputes and delays in their ITC claims, potentially damaging your business relationships. Understanding the details is key, which is covered in our GST Input Tax Credit (ITC) Full Guide 2025 – Eligibility, Limits & Common Issues.
Detailed Guide to HSN Code for Bakery Products & GST Rates
Bakery items, covered primarily under HSN Chapter 19, have varying GST rates that depend on the specific type of product. This section provides a clear bakery products HSN code explained guide to help you classify your goods accurately. The GST applicable on bakery items can range from 0% to 18%, making correct identification essential.
Breads, Buns, and Rusks (HSN Chapter 1905)
Not all bread is taxed equally. The GST council has made clear distinctions based on the type and packaging of the bread product. For any business dealing in these items, understanding this table is the first step to accurate invoicing and tax filing in the HSN code bakery products India framework.
| Product | HSN Code | GST Rate | Notes |
|---|---|---|---|
| Bread (except Pizza Bread) | 1905 | 0% (NIL) | Applies to unbranded, non-packaged bread loaves and buns. |
| Pizza Bread | 1905 | 5% | Specifically classified and taxed at a higher rate than regular bread. |
| Toasted Bread (Rusks) | 1905 40 00 | 5% | This includes all branded and unbranded rusks. |
Cakes, Pastries, and Biscuits (HSN Chapter 1905)
Indulgent items like cakes, pastries, and biscuits fall into a higher tax bracket. Unlike basic bread, these products are considered confectionery or luxury food items and attract a standard GST rate of 18%.
| Product | HSN Code | GST Rate | Notes |
|---|---|---|---|
| Pastries and Cakes | 1905 | 18% | This is a broad category covering all types of cakes and pastries. |
| Waffles and Wafers | 1905 32 | 18% | Includes both coated (e.g., with chocolate) and uncoated varieties. |
| Sweet Biscuits | 1905 31 00 | 18% | This covers all forms of sweet biscuits sold in the market. |
Navigating HSN Codes for Sweets India
The classification of sweets in India can be particularly tricky. A common point of confusion for many business owners is the distinction between traditional Indian mithai and other forms of confectionery like chocolates and candies. This distinction is crucial as it directly impacts the GST rate applied. Understanding HSN code for sweets ensures you charge the correct tax and maintain accurate records.
Traditional Indian Sweets (Mithai) (HSN Chapter 2106)
Good news for mithai shop owners: most traditional Indian sweets fall under a lower GST slab. Items like Barfi, Ladoo, Peda, Gulab Jamun, and other similar milk-based or flour-based sweets are classified under HSN code 2106 90 99.
Applicable GST Rate: 5%
This favourable tax rate is a significant advantage for businesses dealing primarily in traditional Indian mithai. It’s vital to use this classification correctly to avoid overcharging customers or facing compliance issues by mistakenly applying a higher rate.
Chocolates vs. Sugar Confectionery
While Indian mithai enjoys a 5% GST rate, other sweet items are taxed much higher. It’s essential to differentiate your products correctly:
- Sugar Confectionery: This category includes items like hard-boiled candies, toffees, and chewing gum. These products fall under HSN Chapter 1704 and attract a GST rate of 18%.
- Chocolates: All forms of chocolates and other food preparations containing cocoa are classified under HSN Chapter 1806. The applicable GST rate for these products is 18%.
The significant difference in GST rates (5% for mithai vs. 18% for chocolates) makes accurate classification a top priority for sweet sellers.
Finding the Right HSN Code for Namkeen Products India
Savory snacks, or namkeen, are a staple in the Indian market. Just like sweets, they have a specific HSN classification that business owners must follow. This namkeen HSN code guide India will help you correctly identify the tax liability for your savory products.
Classifying Bhujia, Mixtures, and Other Fried Snacks
Most common Indian namkeens, such as Bhujia, Sev, Mixture, Chivda, and other similar fried savory snacks, are classified under the same HSN code as Indian mithai. These products fall under HSN 2106 90 99, which is a broad category for “Food Preparations not elsewhere specified or included.”
Applicable GST Rate: 12%
It’s crucial to note this distinction. While traditional mithai and namkeen can share the same parent HSN chapter (2106), the government has specified different tax rates for them. Mithai is taxed at 5%, whereas these savory namkeen products are taxed at 12%.
What About Potato Chips?
Potato chips and similar fried snacks made from potatoes or other vegetables also fall under the category of savory food preparations. They are classified under HSN 2106 90 99 and attract the same GST rate as other namkeens.
Applicable GST Rate: 12%
Conclusion: Simplify Your GST Compliance
Navigating the nuances of GST can be daunting, but a clear understanding of HSN codes is the bedrock of compliance for any food business in India. From the 0% rate on basic bread to the 18% rate on cakes and chocolates, the tax liability varies significantly across products. Getting the HSN code for bakery products, sweets, and namkeen correct is fundamental for accurate tax filing, smooth ITC claims, and building a healthy, penalty-free business.
Feeling uncertain about your product classification? Don’t risk non-compliance. TaxRobo’s GST experts are here to help you with everything from HSN code identification to seamless GST return filing. Contact us today for a free consultation!
Useful Resources:
- GST HSN Code Search Tool: GST Portal HSN Search
- Expert GST Services: TaxRobo GST Services
Frequently Asked Questions (FAQs)
Q1. What is the HSN code for homemade cakes sold by a small, unregistered business?
A: If your annual turnover is below the GST registration threshold (₹40 lakh for goods in most states), you are not required to register for GST. Consequently, you don’t need to charge GST or use HSN codes on your invoices. However, once you cross the threshold and register, cakes will fall under HSN 1905 and attract 18% GST.
Q2. Is GST applicable on all types of bread?
A: No. Unbranded, unpackaged bread (excluding pizza bread) is exempt from GST, meaning it has a 0% tax rate. However, branded bread, toasted bread (rusks), and specifically pizza bread attract 5% GST.
Q3. How do I find the correct HSN code if my product is not on this list?
A: If you have a unique product, the best approach is to use the HSN search tool on the official GST portal. For complex products or to ensure 100% accuracy, it is highly recommended to consult with a tax professional like TaxRobo to get the correct classification and avoid potential errors.
Q4. What is the main difference in GST between Indian mithai and chocolates?
A: The key difference lies in their HSN classification and resulting tax rate. Traditional Indian mithai generally falls under HSN 2106 and is taxed at 5% GST. In contrast, chocolates fall under HSN 1806 and are taxed at a much higher rate of 18% GST. This is a crucial distinction that significantly impacts the final price and your tax liability.
Q5. Are there penalties for using the wrong HSN code for my bakery products?
A: Yes, absolutely. Using an incorrect HSN code for bakery products can lead to the payment of an incorrect amount of tax. If you underpay tax due to misclassification, the tax authorities can levy a penalty of up to 100% of the tax amount due, along with interest on the shortfall.
