HSN Code for Packaged Food, Beverages, and Dairy Products 2025
Launching a new line of homemade snacks or running a small cafe? Every product on your invoice needs a specific code for GST purposes. But how do you find the right one? This process can seem daunting, but it’s a crucial part of managing your business finances correctly. Understanding this system is non-negotiable for tax compliance. This guide is designed to simplify the process of finding the correct HSN code for packaged food, beverages, and dairy products, ensuring your business stays on the right side of the law. This article will provide a detailed breakdown of HSN codes by category, the latest GST rates for 2025, and practical steps on how to find the exact code for your specific products.
What is an HSN Code and Why is it Critical for GST?
The Harmonized System of Nomenclature (HSN) is a globally recognized method of classifying goods. It’s a six-to-eight-digit uniform code that classifies more than 5,000 products and is accepted worldwide. In India, the HSN code system was adopted for Customs and Central Excise and has now been integrated into the Goods and Services Tax (GST) regime. For any small business owner, from a local baker to a packaged snacks manufacturer, using the correct HSN code is not just a suggestion—it’s a mandatory requirement. It forms the backbone of GST compliance, ensuring that every product is taxed uniformly across the country, which simplifies trade and reduces administrative burdens. Failing to use the correct code can lead to significant business disruptions, including incorrect tax filings and potential penalties from tax authorities. A foundational step for any new enterprise is covered in our Ultimate Guide to GST Registration for Small Businesses.
Understanding the HSN Code Structure
At first glance, an HSN code might look like a random string of numbers, but it has a very logical structure. The 8-digit HSN code is broken down into four parts, each providing a more specific classification:
- Chapter (First 2 digits): This identifies the broad category of the product. For example, Chapter 19 covers ‘Preparations of cereals, flour, starch or milk.’
- Heading (Next 2 digits): This narrows down the category within the chapter. For instance, within Chapter 19, heading ’05’ refers to ‘Bread, pastry, cakes, biscuits and other bakers’ wares.’
- Sub-heading (Next 2 digits): This provides a more detailed description of the product. Continuing the example, 1905 31 would specify ‘Sweet biscuits.’
- Tariff Item (Last 2 digits): These are the final digits that further specify the product, often for import/export purposes, leading to a highly specific classification like 1905 31 00.
Under Indian GST law, the number of HSN digits you must declare on your invoices depends on your annual aggregate turnover:
- Turnover up to ₹5 crore: A minimum of a 4-digit HSN code is mandatory for B2B (Business-to-Business) invoices. It is optional for B2C (Business-to-Consumer) invoices.
- Turnover above ₹5 crore: A 6-digit HSN code is mandatory for all invoices, including B2B and B2C.
The Direct Link Between HSN Codes and GST Rates
The most critical function of an HSN code in the GST framework is its direct link to the applicable tax rate. Each HSN code is assigned a specific GST rate, which is divided into five slabs: 0% (exempt), 5%, 12%, 18%, and 28%. When you generate an invoice, the HSN code you mention tells the tax system which rate to apply. This determines the amount of CGST (Central GST) and SGST (State GST) you collect for sales within your state (intra-state) or the amount of IGST (Integrated GST) you collect for sales outside your state (inter-state). Therefore, using the precise HSN code for packaged food in India is essential. An error could mean you either overcharge your customers and pay excess tax or undercharge and face penalties and interest from the tax department for the deficit.
A Detailed Guide to the HSN Code for Packaged Food (2025)
Finding the right HSN code for packaged food can be tricky, as it covers a vast range of items from chips to ready-to-eat meals. The classification depends on the ingredients, preparation method, and whether the item is branded or unbranded. Here’s a breakdown of common categories as per the packaged food HSN code 2025 guidelines to help you classify your products accurately. It’s essential for small food businesses, cafes, and kirana stores to get this right to ensure smooth GST filing and accurate Input Tax Credit (ITC) claims. Understanding How to File GST Returns Online: A Step-by-Step Guide of the GST Filing Process & Procedure is the next logical step in this process.
Chapter 19 & 20: Preparations of Cereals, Pastas, Baked Goods, and Vegetables
These chapters cover a significant portion of the packaged foods we consume daily. This includes everything from breakfast cereals and instant noodles to biscuits and savoury snacks. The GST rates can vary widely even within the same chapter, so paying attention to the specific sub-heading is crucial for compliance. For example, simple pasta is taxed differently from a pre-cooked pasta meal kit.
| Product Category | Common Examples | Example HSN Code | GST Rate (%) |
|---|---|---|---|
| Biscuits & Wafers | Parle-G, Oreo, Cream Biscuits | 1905 | 18% |
| Pasta & Noodles | Packaged Macaroni, Instant Noodles | 1902 | 12% |
| Namkeen & Bhujia | Packaged Chips, Bhujia, Mixtures | 2106 | 12% |
| Jams, Jellies & Sauces | Ketchup, Fruit Jams, Mayonnaise | 2103 | 12% |
Chapter 21: Miscellaneous Edible Preparations
Chapter 21 is a catch-all category for edible preparations that do not fit into the other, more specific chapters. This includes items like instant coffee mixes, tea pre-mixes, soup powders, food flavourings, and certain health supplements. When classifying products under this chapter, it’s vital to read the descriptions carefully. For instance, the HSN code and GST rate for roasted coffee beans are different from those for instant coffee powder. Similarly, a protein powder sold as a food supplement will fall under a different code (often 2106) than a simple milk-based drink. Always verify the exact product description in the tariff schedule to avoid misclassification.
Finding the Right HSN Code for Beverages in India
The beverage market is diverse, from essential packaged water to sugary sodas and complex health drinks. The HSN code for beverages in India varies significantly, directly impacting the final price for the consumer and the tax liability for the business. This classification is primarily handled under Chapter 22 of the HSN system. Whether you run a small juice shop or distribute soft drinks, understanding these codes is fundamental to your operations. The GST rates for beverages can range from 12% for fruit juices to as high as 28% plus an additional cess for carbonated drinks, making accuracy paramount.
Chapter 22: Beverages, Spirits, and Vinegar
This chapter covers all types of non-alcoholic and alcoholic beverages. For most small businesses, the focus will be on non-alcoholic drinks like water, juices, and aerated drinks. It’s important to note that milk-based beverages like flavoured milk or lassi are also classified under this chapter, not under the dairy chapter, which often causes confusion. The applicable beverages HSN code 2025 and its corresponding rate depend on the nature of the drink—whether it’s carbonated, fruit-pulp based, or milk-based.
| Product Category | Common Examples | Example HSN Code | GST Rate (%) |
|---|---|---|---|
| Packaged Drinking Water | Mineral Water, Purified Water | 2201 | 18% |
| Fruit Juices (Packaged) | Real, Tropicana, Paper Boat | 2202 | 12% |
| Aerated & Carbonated Drinks | Coke, Pepsi, Soda | 2202 | 28% + 12% Cess |
| Milk-Based Drinks | Flavoured Milk, Lassi, Chaas | 2202 | 12% |
Note on Alcoholic Beverages
It is a crucial point for restaurants, bars, and retailers to remember that alcoholic liquor for human consumption is kept outside the purview of GST. These products are not classified under the GST HSN system and do not attract GST. Instead, they are subject to state-level taxes, primarily Value Added Tax (VAT) and State Excise Duty. The rates and regulations for these taxes vary from one state to another. Therefore, businesses dealing in alcoholic beverages must comply with their respective state’s tax laws for these items, while following GST laws for all other food and non-alcoholic beverages they sell.
Navigating the HSN Code for Dairy Products in India
Dairy is a staple in India, but its GST classification can be surprisingly complex. The correct HSN code for dairy products in India often depends on whether the product is fresh, pasteurized, processed, or sold under a brand name. For small dairies, sweet shops, and grocery store owners, understanding these nuances is critical for accurate pricing and tax compliance. A simple change, like putting milk in a Tetra Pak versus a simple pouch, or selling branded paneer versus unbranded, can change the GST rate from 0% to 5% or higher, significantly impacting the business’s bottom line and compliance requirements.
Chapter 04: Dairy Produce, Eggs, and Honey
Chapter 04 of the HSN schedule covers milk, dairy products, bird’s eggs, natural honey, and other edible products of animal origin. The key to correct classification within this chapter is the level of processing and branding. Fresh milk, for instance, is exempt from GST, but as soon as it is processed into UHT (Ultra High Temperature) milk and packed in a carton for a longer shelf life, it attracts a 5% GST. The dairy products HSN code 2025 guidelines continue this distinction for products like paneer, curd, and lassi.
| Product Category | Common Examples | Example HSN Code | GST Rate (%) |
|---|---|---|---|
| Fresh/Pasteurised Milk | Loose milk, non-UHT packets | 0401 | 0% (Exempt) |
| UHT Milk & Cream | Long-life Tetra Pak milk | 0401 | 5% |
| Paneer (Branded & Packaged) | Packaged paneer with a brand name | 0406 | 5% |
| Butter & Ghee | Amul Butter, Packaged Ghee | 0405 | 12% |
| Cheese & Yogurt | Packaged Cheese Slices, Flavoured Yogurt | 0406 | 12% |
The ‘Branded’ vs. ‘Unbranded’ Distinction
One of the most important factors in the dairy and packaged food sector is the distinction between ‘branded’ and ‘unbranded’ goods. The GST Council has clarified that pre-packaged and labelled items, even without a registered brand name, will attract GST. This distinction also highlights the importance to Secure Your Brand’s Future Trademark Your Brand – Registration, Benefits & The Cost of Neglect. For example, unbranded, loose paneer sold by a local dairy is exempt from GST. However, the moment that same paneer is pre-packaged, labelled (even with just the shop’s name), and sold, it falls under HSN code 0406 and attracts 5% GST. This rule applies to many staples like curd, lassi, wheat flour, and rice. Small businesses must be very careful about their packaging and labelling practices, as this directly determines whether they need to collect and remit GST on these essential items.
How to Find and Verify Your Product’s HSN Code
While the tables above provide a good starting point, it’s always best to verify the exact HSN code for your specific product using official sources. The HSN list is extensive, and minor differences in a product’s composition can change its classification. Using a systematic approach to find and verify the code can save you from future compliance issues.
Step 1: Use the Official GST Portal
The Government of India’s official GST portal has a handy, user-friendly tool to search for HSN codes. It’s the most reliable first stop for any business owner.
- Go to the official GST website: GST HSN Search Tool.
- On the homepage, navigate to `Services > User Services > Search HSN Code`.
- You can search for a code using either the product’s description (e.g., “biscuits,” “cheese”) or, if you have an idea, by the chapter number.
- The tool will provide you with a list of relevant HSN codes and their descriptions, helping you find the most accurate match.
Step 2: Refer to the CBIC Tariff Documents
For a more detailed and legally authoritative classification, especially for unique or complex products, you should refer to the documents published by the Central Board of Indirect Taxes and Customs (CBIC). The CBIC website hosts the complete GST tariff schedule, which provides detailed descriptions, chapter notes, and section notes that clarify the scope of each HSN code. This is the ultimate source of truth for HSN classification in India. You can access the latest GST rates and HSN classifications on the CBIC GST section of their website.
Step 3: When to Consult an Expert
If you are dealing with a large inventory of diverse products, importing or exporting goods, or have a product that doesn’t clearly fit into any category, it is highly advisable to consult a professional. Tax experts and Chartered Accountants specialize in classification and can provide definitive guidance. Making a mistake can be costly, leading to incorrect tax payments, penalties, and legal notices. An expert can analyze your product’s composition, usage, and marketing to determine the most accurate HSN code, ensuring your business is fully compliant. The team at TaxRobo offers expert GST services to help businesses with accurate HSN classification, return filing, and overall GST compliance management.
Conclusion
Mastering the HSN code system is a fundamental aspect of running a successful business in India’s GST era. For business owners in the food and beverage industry, this knowledge is even more critical due to the wide variety of products and nuanced tax rates. Correctly identifying the HSN code for packaged food, beverages, and dairy isn’t just a regulatory formality—it’s fundamental to your business’s financial health and smooth operations. By understanding the HSN structure, referring to official sources for classification, and knowing the GST rates applicable to your products, you can ensure compliance, manage your finances effectively, and avoid unnecessary penalties.
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FAQs on HSN Codes for Food Products
1. What happens if I use the wrong HSN code on my invoice?
Answer: Using an incorrect HSN code can lead to a cascade of problems. The most immediate issue is the incorrect calculation of GST, which may result in you either overpaying or underpaying tax. If you underpay, you could receive a demand notice from the tax department requiring you to pay the deficit along with interest and penalties that can be as high as 100% of the tax due. It can also lead to issues with claiming Input Tax Credit (ITC) and discrepancies during GST audits.
2. Is the HSN code the same for all states in India?
Answer: Yes, absolutely. The ‘H’ in HSN stands for ‘Harmonized.’ The system is designed to be a uniform classification code across the entire country. The HSN code for a specific product remains the same whether you are selling it in Maharashtra, West Bengal, or any other state or union territory in India. This standardization is a core principle of the GST regime, aimed at creating a ‘One Nation, One Tax’ system.
3. Do I need to mention the HSN code on B2C (Business-to-Consumer) invoices?
Answer: It depends on your annual turnover. For businesses with an annual aggregate turnover of up to ₹5 crore, mentioning HSN codes on B2C invoices is optional, though it is still mandatory for B2B invoices. However, for businesses with a turnover exceeding ₹5 crore, it is mandatory to mention a 6-digit HSN code on all tax invoices, including those issued to consumers (B2C).
4. How often do HSN codes and GST rates change?
Answer: HSN codes and their corresponding GST rates are not static. They are reviewed and revised periodically by the GST Council based on industry representations, economic factors, and policy objectives. Major changes are often announced after GST Council meetings. It is crucial for businesses to stay updated with the latest circulars and notifications, especially around the beginning of a new financial year. This is why checking for the latest packaged food HSN code 2025 is important to ensure ongoing compliance.
5. Where can I find the most updated official list of HSN codes?
Answer: The most reliable and official source for the latest list of HSN codes and corresponding GST rates is the Central Board of Indirect Taxes and Customs (CBIC) website. The CBIC regularly updates the GST tariff schedule and rate notifications. You can also use the HSN search facility on the official GST portal for quick reference, but for legal and definitive classification, the CBIC website is the final authority.
