.gif)
.webp)
.svg)
Key Highlights
- The GST rate for all types of tea, including loose, packaged, and flavoured tea, is set at 5%.
- Using the correct HSN code (0902) prevents potential legal issues for businesses.
- Proper identification of tea HSN codes ensures compliance with GST regulations and smooth business operations.
Tea is enjoyed by millions around the world, and it’s a significant part of the global economy. Whether you’re buying a simple packet of loose tea or a high-end branded tea in a box, GST rates apply to these products.But how exactly does GST affect tea, and why should you care about HSN codes? Whether you are a consumer or a business involved in the tea industry, knowing the right HSN code and the applicable GST rates can help streamline your tea purchases or sales.On that note, let's understand the GST rates for tea, clarify the tea HSN code, and explain how these aspects impact businesses and consumers alike.
What are HSN Codes and How Do They Apply to Tea?
HSN stands for Harmonized System of Nomenclature. It is an international coding system used to classify products systematically. Under GST, products are classified using HSN codes, which helps in applying the correct tax rate. These codes are essential because they ensure businesses charge the right amount of tax, whether it’s a loose tea packet or a premium tea blend.In the case of tea, the correct HSN code will ensure that the GST rate is accurately applied, simplifying the tax process for both businesses and consumers.For example, the HSN code for tea applies specifically to tea in any form—whether it’s bulk loose tea, tea bags, or packaged tea.
Tea HSN Code and GST Rate for Different Types of Tea
Now, let's explore the tea HSN code and the applicable GST rates . 1. Loose Tea (HSN Code: 0902)
- HSN Code : 0902
- GST Rate : 5%
Loose tea, whether it’s black tea, green tea, or any other variety, is classified under HSN code 0902 . The GST rate applicable to loose tea is 5% . This rate applies to tea that is sold in bulk or in unpackaged form, such as what you might buy from a local tea vendor or directly from a tea estate. 2. Packaged Tea (HSN Code: 0902)
- HSN Code : 0902
- GST Rate : 5%
Packaged tea, including well-known brands and blends that are pre-packed in boxes, tins, or sachets, also falls under HSN code 0902 . The GST rate is 5% for both loose tea and packaged tea, which makes it easy for consumers to understand that the tax rate remains the same whether they purchase tea in bulk or a branded tea packet. 3. Flavoured or Blended Tea (HSN Code: 0902)
- HSN Code : 0902
- GST Rate : 5%
This category includes teas that are infused with herbs, spices, or other flavours, such as masala chai or fruit-infused teas . These teas are typically classified under the same HSN code 0902 and are subject to the same 5% GST rate .Here are the HSN codes and GST rates for different types of tea:
| HSN Code | Description | GST Rate (%) |
| 902 | Tea, whether or not flavoured | 5 |
| 902 | Tea, whether or not flavoured | 0 |
| 9021010 | Green tea (not fermented) in immediate packings of a content not exceeding 3 kg: Content not exceeding 25 g | 5 |
| 9021020 | Green tea (not fermented) in immediate packings of a content not exceeding 3 kg: Content exceeding 25 g but not exceeding 1 kg | 5 |
| 9021030 | Green tea (not fermented) in immediate packings of a content not exceeding 3 kg: Content exceeding 1 kg but not exceeding 3 kg | 5 |
| 9021090 | Green tea (not fermented) in immediate packings of a content not exceeding 3 kg: Other | 5 |
| 9022010 | Other green tea (not fermented): Green tea in packets with contents exceeding 3 kg but not exceeding 20 kg | 5 |
| 9022020 | Other green tea (not fermented): Green tea in bulk | 5 |
| 9022030 | Other green tea (not fermented): Green tea agglomerated in forms such as ball, brick and tablets | 5 |
| 9022040 | Other green tea (not fermented): Green tea waste | 5 |
| 9022090 | Other green tea (not fermented): Other | 5 |
| 9023010 | Black tea (fermented) and partly fermented tea, in immediate packings of a content not exceeding 3 kg: Content not exceeding 25 g | 5 |
| 9023020 | Black tea (fermented) and partly fermented tea, in immediate packings of a content not exceeding 3 kg: Content exceeding 25 g but not exceeding 1 kg | 5 |
| 9023030 | Black tea (fermented) and partly fermented tea, in immediate packings of a content not exceeding 3 kg: Content exceeding 1 kg but not exceeding 3 kg | 5 |
| 9023090 | Black tea (fermented) and partly fermented tea, in immediate packings of a content not exceeding 3 kg: Other | 5 |
| 9024010 | Other black tea (fermented) and other partly fermented tea: Content exceeding 3 kg but not exceeding 20 kg | 5 |
| 9024020 | Other black tea (fermented) and other partly fermented tea: Black tea, leaf in bulk | 5 |
| 9024030 | Other black tea (fermented) and other partly fermented tea: Black tea, dust in bulk | 5 |
| 9024040 | Other black tea (fermented) and other partly fermented tea: Tea bags | 5 |
| 9024050 | Other black tea (fermented) and other partly fermented tea: Black tea, agglomerated in forms such as ball, brick and tablets | 5 |
| 9024060 | Other black tea (fermented) and other partly fermented tea: Black tea, waste | 5 |
| 9024090 | Other black tea (fermented) and other partly fermented tea: Other | 5 |
Impact of GST on Tea
Understanding the GST rates and HSN code for tea is important for businesses in the tea industry and as well as consumers. For Businesses in the Tea Industry For tea traders, manufacturers, and retailers, GST plays a crucial role in how tea is sold and taxed:
- Input Tax Credit (ITC) : Tea businesses can claim an Input Tax Credit (ITC) on the GST paid for inputs like tea leaves, packaging materials, and other goods used in production. This helps reduce the overall tax burden on the business.
- Simplified Taxation : The application of 5% GST across various tea types (loose, packaged, and flavoured) ensures a simplified taxation system, reducing the complexity of calculating different tax rates for different varieties of tea.
- Export Benefits : For tea exporters, exports are generally zero-rated under GST , meaning there is no GST levied on the export of tea. However, businesses can still claim ITC on any tax paid for inputs used to make tea for export purposes.
- Uniform Taxation : The 5% GST rate ensures that businesses don’t face fluctuating tax rates on different forms of tea, which helps streamline pricing and sales operations.
For Consumers For consumers, the 5% GST rate is relatively low, but it still impacts the price of tea. Here’s how it affects tea lovers:
- Price Predictability : Whether you’re buying loose tea from a local store or a premium, pre-packaged brand, you can expect a 5% GST to be added to the cost. This makes it easier to predict and compare prices across different tea types.
- Affordable Tea : A 5% GST on tea is fairly low compared to other goods, making tea an affordable beverage for consumers in most price ranges. The overall tax impact is minimal.
How to Maximise Your Savings While Purchasing Tea?
As a consumer, there are a few ways you can maximise savings on tea while keeping the GST impact in mind: For Consumers
- Buy in Bulk : Buying tea in bulk, especially loose tea , can often be more economical. While 5% GST applies to both loose and packaged tea, bulk purchases typically reduce the per-unit cost, making it a more cost-effective option.
- Look for Discounts : Many tea brands or online retailers offer discounts, promotions, or bulk buying options, which can help offset the cost of GST . Look out for sales that reduce the overall price of your tea.
- Shop Locally : Local tea vendors often sell loose tea at competitive prices. Shopping locally can help you avoid shipping charges and may offer fresher products.
For Businesses
- Claim Input Tax Credit (ITC) : As a business, ensure you are claiming ITC on the GST paid for raw materials, including tea leaves, packaging, and other supplies. This can help reduce your overall tax liability.
- Accurate HSN Code Usage : Make sure that the correct HSN code is used for all tea products. Using the wrong HSN code can lead to compliance issues or penalties. This is especially important when selling flavoured, packaged, or loose tea.
- Focus on Export Markets : For tea businesses looking to expand, exporting tea to international markets can provide tax advantages. Since tea exports are typically zero-rated under GST , businesses can benefit from tax exemptions on exported goods.
Use GST Knowledge to Plan Your Purchasing and Business Strategy
With a clear understanding of GST rates and HSN codes for tea, you can control both your purchasing decisions and business operations.As a consumer, knowing the 5% GST rate helps you predict costs accurately, whether you're buying loose tea in bulk or a premium branded pack. By considering local vendors or discounts, you can minimise costs while enjoying your favourite tea.For businesses, ensuring the correct use of HSN codes and claiming ITC on inputs can reduce your overall tax liabilities. Staying up-to-date with GST regulations also helps you avoid penalties, streamline operations, and even explore export opportunities to grow your business.Equipped with this knowledge, you can make decisions that save you both time and money. If you need assistance with tax planning, feel free to connect with Aditya Birla Capital representatives today!
FAQS - FREQUENTLY ASKED QUESTIONS
What is the GST rate for tea?
The GST rate for tea (whether loose or packaged) is 5% under HSN code 0902.
What is the HSN code for tea?
The HSN code for tea is 0902, which includes all forms of tea, such as loose tea, packaged tea, and flavoured tea.
Is flavoured tea taxed the same as regular tea?
The HSN code for tea is 0902, which includes all forms of tea, such as loose tea, packaged tea, and flavoured tea.
Can businesses claim Input Tax Credit (ITC) for tea?
Yes, businesses involved in the tea industry can claim ITC on the GST paid on inputs used to produce or sell tea.
How do I calculate GST on tea?
To calculate GST on tea, you need to multiply the base price by the 5% GST rate. For example, if a packet of tea costs ₹200, the GST would be ₹10, making the total cost ₹210.
Does GST apply to exported tea?
Exports of tea are generally zero-rated under GST, which means no GST is charged on tea exports. However, businesses can still claim ITC for taxes paid on inputs used to produce exported tea.
How does GST affect the price of tea?
The GST of 5% added to the base price of tea can slightly increase the cost for consumers. However, it remains a relatively low tax compared to other products, making tea affordable for most buyers.
What types of tea are subject to the 5% GST rate?
The 5% GST rate applies to all types of tea, including loose tea, packaged tea, flavoured tea, and any form of green or black tea. All varieties fall under HSN code 0902.
Can I get a refund for the GST I paid on tea?
Generally, GST on tea is not refundable unless you are a business and can claim Input Tax Credit (ITC) on the tea used as an input. As a consumer, the GST paid on tea is not refundable.
Are there any exemptions or reduced GST rates for tea?
No, there are no exemptions or reduced GST rates for tea under HSN code 0902. The GST rate for all types of tea remains consistent at 5%.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
