Your GST rate is not a choice — it's a consequence. The rate your product attracts follows mechanically from its HSN code, and the HSN code follows from what the product actually is: its ingredients, its processing, and sometimes even how it's packed. Founders who treat HSN as a formality on the invoice discover the cost later, when a GST officer reclassifies three years of sales at a higher rate and raises a demand with interest.
Here's how the system works and where packaged food classification actually gets decided.
HSN (Harmonised System of Nomenclature) is the international commodity classification system maintained by the World Customs Organization. India uses it for both customs and GST. The structure is hierarchical: the first two digits are the chapter, the next two the heading, then the sub-heading, and India adds two more digits for national tariff lines — eight digits in total.
How many digits you must quote on invoices depends on your turnover: businesses up to ₹5 crore annual turnover must use at least 4-digit codes (B2B invoices), those above ₹5 crore must use 6 digits, and exports require the full 8-digit code on shipping documents.
| Chapter/Heading | What falls here | Typical GST rate* |
|---|---|---|
| 04 — Dairy | Milk, butter, ghee, cheese, paneer | 0% (UHT milk, pre-packaged paneer) to 5% (butter, ghee, cheese) |
| 08 — Nuts & dried fruit | Cashews, almonds, raisins, dried fruit | 5% |
| 1902 / 1905 — Cereal preparations | Pasta, noodles (1902); biscuits, bread, cakes, khakhra (1905) | 0% (plain bread, khakhra/roti) to 5% (biscuits, pasta, noodles) |
| 2008 — Prepared nuts & fruit | Roasted/salted nuts, roasted makhana, peanut butter | 5% |
| 2009 — Juices | Fruit and vegetable juices | 5% |
| 2106 — Food preparations n.e.s. | Namkeen, bhujia, mixtures, many "misc" packaged foods | 5% |
| 2202 — Beverages | Aerated drinks, caffeinated energy drinks, fruit-based drinks | 40% (aerated/caffeinated); fruit pulp-based drinks lower |
*Rates reflect the structure in force since the GST rate rationalisation of 22 September 2025, which collapsed the old 12% and 28% slabs into 5% and 18% and introduced a 40% demerit rate. Most packaged foods that used to sit at 12% (namkeen, butter, sauces, jams) or 18% (biscuits, pasta, cornflakes, ice cream) now attract 5%. Always verify your specific tariff line against the current CBIC schedule — this table is directional, not exhaustive.
Processing changes the chapter. A raw cashew is Chapter 08. Roast and salt it, and it moves to 2008. Fry it into a masala mix with besan, and you're arguably in 2106 as namkeen. Each move can change the rate. The classic disputes in Indian food GST — is a fryum a papad, is flavoured milk a beverage or dairy, is a cream-filled wafer a biscuit or confectionery — are all fights about which heading a borderline product belongs to.
"Pre-packaged and labelled" changes the rate. Since July 2022, the trigger for GST on many staples is not "branded vs unbranded" but whether the product is "pre-packaged and labelled" under the Legal Metrology Act — packs up to 25 kg carrying mandatory declarations. Loose or bulk sales of the same commodity can be exempt while your retail pack is taxed.
Composite products follow their essential character. A gift box with namkeen, chocolate, and a diya is classified by what gives it its essential character — or, if sold as a kit at one price, by specific composite-supply rules. Price your festive SKUs with this in mind, not by averaging the rates of the contents.
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Open GST Calculator →This article is general guidance, not tax advice. HSN classification is fact-specific and rates change by notification — confirm your tariff line with a qualified CA before invoicing.