GST on Sugar – Tax Rate, HSN Code & Market Impact

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The Goods and Services Tax (GST) is a unified indirect tax system in India that replaced multiple state and central taxes. Under GST, sugar is categorised as an essential commodity with a fixed rate.

Sugar attracts a GST rate of 5%, making it affordable while ensuring government revenue. For instance, Mr. Raj, who owns a sweet shop in Delhi, purchased 1,000 kg of sugar at ₹40 per kg. He paid 5% GST on this purchase. Later, he used the sugar to prepare sweets sold at a higher GST rate (e.g., 5% or 18%, depending on the sweet type). He can claim Input Tax Credit on the sugar purchased.

Item	Quantity	Rate per kg (₹)	Total (₹)	GST @5% (₹)	Final Cost (₹)
Sugar Purchased	1,000 kg	₹40	₹40,000	₹2,000	₹42,000

This system ensures transparency in taxation and helps shopkeepers claim credit for the tax they have already paid during procurement.

GST Rates for Different Categories of Sugar

Category	Product Description	CGST Rate	SGST Rate	Total GST Rate
Basic Sugar Products
Pure Sugars	Chemically pure lactose, maltose, glucose and fructose (solid form)	9%	9%	18%
Sugar Confectionery	Sugar confectionery (other than mishri, batasha, bura, sakar, khadi sakar, harda, sakariya, gatta, kuliya, elaichidana, lukumdana, chikkis, peanut chikki, sesame chikki, til chikki, til patti, til revdi)	9%	9%	18%
Sugar Syrups	Sugar syrups not containing added flavouring or colouring matter; artificial honey (whether or not mixed with natural honey); caramel (other than palmyra sugar and Palmyra jaggery)	9%	9%	18%
Traditional Indian Sugar Products
Jaggery - Cane	Cane sugar	2.5%	2.5%	5%
Jaggery - All Types	Jaggery of all types, including Cane Jaggery (gur), Palmyra Jaggery, pre-packaged and labelled; Khandsari Sugar, pre-packaged and labelled	2.5%	2.5%	5%
Traditional Sweets	Palmyra sugar, mishri, batasha, bura, sakar, khadi sakar, harda, sakariya, gatta, kuliya, elaichidana, lukumdana, chikkis (puffed rice chikki, peanut chikki, sesame chikki, til chikki, til patti, til revdi), sugar makhana, groundnut sweets, gajak, khaja, khajuli, anarsa	2.5%	2.5%	5%
Sugar in Food Products
Dairy with Sugar	Milk and cream, concentrated or containing added sugar or other sweetening matter, including skimmed milk powder, milk food for babies (other than condensed milk)	2.5%	2.5%	5%
Yoghurt with Sugar	Yoghurt, cream, kephir and other fermented or acidified milk and cream, whether or not concentrated or containing added sugar or other sweetening matter or flavoured or containing added fruit, nuts or cocoa	2.5%	2.5%	5%
Whey with Sugar	Whether or not concentrated or containing added sugar or other sweetening matter	2.5%	2.5%	5%
Eggs with Sugar	Birds' eggs, not in shell, and egg yolks, fresh, dried, cooked by steaming or by boiling in water, moulded, frozen or otherwise preserved, whether or not containing added sugar or other sweetening matter	2.5%	2.5%	5%
Sugar in Processed Foods
Fruit & Nuts with Sugar	Fruit and nuts, uncooked or cooked by steaming or boiling in water, frozen, whether or not containing added sugar or other sweetening matter	2.5%	2.5%	5%
Sugar Beet Products	Locust beans, seaweeds and other algae, sugar beet and sugar cane, frozen or dried, whether or not ground	2.5%	2.5%	5%
Preserved Vegetables	Vegetables, fruit, nuts, fruit-peel and other parts of plants, preserved by sugar (drained, glacé or crystallised)	6%	6%	12%
Jams & Preserves	Jams, fruit jellies, marmalades, fruit or nut purée and fruit or nut pastes, obtained by cooking, whether or not containing added sugar or other sweetening matter	6%	6%	12%
Processed Fruits	Fruit, nuts, and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit	6%	6%	12%
Fruit Juices	Fruit or nut juices (including grape must) and vegetable juices, unfermented and not containing added sugar or other sweetening matter	6%	6%	12%
Sugar in Industrial Products
Sugar Manufacturing Waste	Residues of starch manufacture and similar residues, beet-pulp, bagasse and other waste of sugar manufacture, brewing or distilling dregs and waste	2.5%	2.5%
Sugar Cubes (Refined)	All goods, including refined sugar containing added flavouring or colouring matter, sugar cubes (other than those which attract 5% or nil GST)	6%	6%
Sugar Boiled Confectionery	Sugar-boiled confectionery	6%	6%	12%
Sugar in Beverages
Flavoured Waters	Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter, nor flavoured	9%	9%	18%
Aerated Waters with Sugar	All goods (including aerated waters), containing added sugar or other sweetening matter or flavoured	14%	14%	28%
Sugar-Free/ Nil Rate Products
Fresh Milk	Fresh milk and pasteurised milk, including separated milk, milk and cream, not concentrated nor containing added sugar or other sweetening matter, excluding Ultra High Temperature (UHT) milk	0%	0%	0%
Fresh Sugar Cane/Beet	Locust beans, seaweeds and other algae, sugar beet and sugar cane, fresh or chilled	0%	0%	0%
Unpackaged Jaggery	Jaggery of all types, including Cane Jaggery (gur), Palmyra Jaggery, other than pre-packaged and labelled; Khandsari Sugar, other than pre-packaged and labelled	0%	0%	0%
Unpackaged Puffed Rice	Puffed rice, commonly known as Muri, flattened or beaten rice, commonly known as Chira, parched rice, commonly known as khoi, parched paddy or rice coated with sugar or gur, commonly known as Murki (other than pre-packaged and labelled)	0%	0%	0%

Sugar Categories with HSN Codes

HSN Code	Category	Description
1701	Raw Sugar	Cane or beet sugar and chemically pure sucrose, in solid form
170111	Raw Cane Sugar	Raw sugar not containing added flavouring or colouring matter
170112	Beet Sugar	Raw beet sugar not containing added flavouring or colouring matter
170191	Refined Cane Sugar	Refined cane sugar containing added flavouring or colouring matter
170199	Other Refined Sugar	Other refined sugars and chemically pure sucrose
1702	Other Sugars	Fructose, glucose, lactose, maltose, and sugar syrups
170211	Lactose	Lactose and lactose syrup
170219	Other Lactose	Other lactose and lactose syrup
170220	Maple Sugar	Maple sugar and maple syrup
170230	Glucose	Glucose and glucose syrup
170240	Artificial Honey	Artificial honey, whether or not mixed with natural honey
170250	Chemical Sugar	Chemically pure fructose
170260	Fructose Syrup	Other fructose and fructose syrup
170290	Other Sugar Syrups	Other sugars, including invert sugar
1703	Molasses	Molasses resulting from the extraction or refining of sugar
170310	Cane Molasses	Molasses from cane sugar
170390	Other Molasses	Other molasses
1704	Sugar Confectionery	Sugar confectionery not containing cocoa
170410	Chewing Gum	Chewing gum, whether or not sugar-coated
170490	Sugar Confectionery	Sugar confectionery not containing cocoa, including white chocolate (excluding chewing gum)
17041000	Sugar-Coated Chewing Gum	Chewing gum with a sugar coating
17049090	Other Sugar Confectionery	Other sugar confectionery not containing cocoa (Barfi, Gulab Jamun Mix, Amla Candy, Mukhwas, Coconut Sugar, Sugar Boiled Confectionery)
0802	Sweet Biscuits	Sweet biscuits and cookies
080241	Preserved Fruits	Fruits, nuts and other edible parts of plants, prepared or preserved, containing added sugar (Cereals, fruit purée, pastes, jams, jellies, marmalades)

Impact Of GST on Sugar

The introduction of GST brought important changes to the sugar industry. Under GST, sugar is taxed at 5%, which replaced earlier taxes like excise duty and state VAT. This unified rate made taxation more transparent and easier to manage.

Before GST, sugar was taxed differently in each state, which caused confusion and price differences. Now, with a single GST rate, the supply chain has become smoother, and the movement of sugar between states is simpler.

Sugar manufacturers can also claim Input Tax Credit (ITC) on goods and services used in production, like machinery, packaging, and transport. This helps reduce their overall cost.

Input Tax Credit On Sugar

The introduction of GST has brought both positive and negative effects on the sugar industry. While the system has improved transparency and simplified tax structures, it has also brought challenges for small traders during the initial phase.

Positive Impact	Negative Impact
GST rate fixed at 5%, replacing multiple older taxes	Initial confusion and compliance issues for small traders
Seamless interstate movement due to uniform tax	Digital filing is difficult for the unorganised sectors
Simplified tax structure and improved transparency	Increased paperwork and the need for proper documentation

Conclusion

GST has made the sugar industry more organised by replacing multiple taxes with a single, clear structure. It has helped improve transparency, reduce tax confusion, and made interstate trade easier. Manufacturers now benefit from input tax credit on many business expenses, which lowers overall costs.

FAQ’s

What is the GST rate on sugar?
The GST rate on sugar is 5%, which replaced earlier state and central taxes under the previous system.

Can sugar manufacturers claim Input Tax Credit (ITC)?
Yes, they can claim ITC on inputs like machinery, packaging, and transport services used in production.

Is ITC allowed on sugarcane purchases?
No, sugarcane purchases from farmers are not eligible for Input Tax Credit under GST.

How has GST affected sugar prices?
GST has brought uniform pricing across states, but operational costs may rise due to compliance for small traders.

Did GST make the sugar trade easier between states?
Yes, GST removed entry taxes and state barriers, making interstate movement of sugar smoother and faster.

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