Pre-packaged and Labelled Goods

47th GST Council Meeting was conducted on two days i.e. 28th June 2022 and 29th June 2022 under the Chairmanship of the Finance Minister of India Shrimati Nirmala Sitharaman. In that meeting, it was recommended to revise the scope of exemption with regard to pre-packaged and labelled goods. This article brief on GST applicability on pre-packaged and labelled goods, what condition GST is applicable? and more.

As per the pre-recommended position, notification no. 2/2017- Central Tax (Rate) dated 28th June 2017 covered a list of specified food items which are exempt from GST. Accordingly, specified pre-packaged goods such as rice, wheat, honey, etc. sold either under the brand name for which enforceable rights/ actionable claim is forgone voluntarily or under an unregistered brand name were exempted from GST.

GST on Pre-packaged and Pre-labelled Goods

Following actions were taken by the Government, in order to implement the 47th GST Council recommendations, with regard to GST applicability on pre-packaged and pre-labelled goods –

  1. Issued notification no. 6/2022- Central Tax (Rate) dated 13th July 2022 [amending rate notification no. 1/2017- Central Tax (Rate) dated 28th June 2017]. The notification introduced new GST rates as applicable to different pre-packaged and labelled goods.
  2. Issued notification no. 7/2022- Central Tax (Rate) dated 13th July 2022 [amending exemption notification no. 2/2017- Central Tax (Rate) dated 28th June 2017]. The notification withdrew GST exemption on specified pre-packaged and labelled goods.
  3. Issued Frequently Asked Questions (FAQs) dated 17th July 2022 to clarify GST applicability on pre-packaged and labelled goods.

The present article briefly covers the position of GST applicability till 17th July 2022; an explanation of the term ‘pre-packaged and labelled’ commodity; change in the position of GST applicability as made effective from 18th July 2022 and important clarifications provided vide FAQs issued on 17th July 2022.

GST Position on Packaged and Labelled Till 17th July 2022

GST position on packaged and labelled commodities as applicable till 17th July 2022 is simplified hereunder –

Particulars

GST applicable/ exemption

Condition 1 – Specified goods put up in a container; and
Condition 2 – It is either bearing a registered brand name or brand name in respect of which an actionable claim/ enforceable right in a court of law is available.

GST applicable

Condition 1 – Specified goods put up in a container; and

Condition 2 – It is either having an unregistered brand name or a registered brand name in respect of which an actionable claim/ enforceable right is forgone.

GST exempt

It is important to note that earlier the GST applicability was based on branded/ unbranded goods.

However, with effect from 18th July 2022, the entire concept of applicability of GST on the basis of branded/ unbranded is done away with. Now, the GST applicability is based on the term ‘pre-packaged and labelled’ goods.

What is pre packaged commodity?

what is Pre-packaged and Labelled Goods

Before understanding the new GST applicability as made effective from 18th July 2022, it is important to thoroughly understand the term ‘pre-packaged and labelled’.

Both the notifications i.e. notification no. 6/2022- Central Tax (Rate) and notification no. 7/2022- Central Tax (Rate) dated 13th July 2022 defines the term ‘pre-packaged and labelled’.

Accordingly, ‘pre-packaged and labelled’ means

  • Pre-packaged commodity’ as defined under section 2(l) of the Legal Metrology Act, 2009; and
  • Where such a package is required to bear the declaration as per the provisions of the Legal Metrology Act and rules thereunder.

From the above definition of ‘pre-packaged and labelled’, we need to understand the following two things

  1. Definition of ‘pre-packaged commodity’ as covered u/s. 2(l) of Legal Metrology Act; and
  2. When affixing declaration is mandatory on the package as per the Legal Metrology Act and rules thereunder.

Let us understand both of them thoroughly hereunder

  1. 'Pre-packaged commodity’ means a commodity
    • Which is packaged without the purchaser being present;
    • Such commodity is placed in a package (whether sealed or not) of whatever nature;
    • It is packaged so that the commodity contained therein has a pre-determined quantity.
  2. Rule 6 of the Legal Metrology (Packaged Commodities) Rules, 2011 requires that every package needs to declare the following
    • Name and address of the manufacturer;
    • Name of the commodity;
    • Quantity;
    • Month and year of manufacture/ pre-packed/ imported;
    • Retail sale price; etc.
  3. As per rule 3 of the Legal Metrology (Packaged Commodities) Rules, 2011, the declaration is not required to
    • Packages of commodities containing a quantity of more than 25 kg/ 25 litre; and
    • Packaged commodities which are meant for industrial consumers/ institutional consumers.

Change in position of GST applicability on 'pre-packaged and labelled Goods'

GST applicability w.e.f 18th july

With effect from 18th July 2022, GST applicability is totally dependent on the coverage of the term ‘pre-packaged and labelled’. The GST taxability/ exemption as applicable from 18th July 2022 is simplified in the table below

Particulars

GST applicable/ exemption

Specified goods covered within the term ‘Pre-packaged and labelled’

GST applicable

Specified goods not covered within the term ‘Pre-packaged and labelled’

GST exempt

The following table illustrates the list of specified goods (along with HSN) which are taxable under GST if covered within the term ‘pre-packaged and labelled’

HSN code

Description of goods

GST rates

0202/ 0203/ 0204/ 0205/ 0206/ 0207/ 0208/ 0209/ 0210

Meat & edible meat offal

5%

0303/ 0304/ 0305/ 0306/ 0307/ 0308/ 0309

Fish & crustaceans, molluscs & other aquatic invertebrates

5%

0403

Curd/ Lassi/ Butter milk

5%

0406

Chena/ paneer

5%

0409

Natural honey

5%

0504

Guts/ bladders & stomach of animals [other than fish]/ whole & pieces thereof/ fresh/ chilled/ frozen/ salted/ in brine/ dried/ smoked

5%

0713

Dried leguminous vegetables, shelled [whether or not skinned/ split]

5%

0714

Manioc/ arrowroot/ salep/ Jerusalem/ artichokes/ sweet potatoes and similar roots & tubers with high starch/ inulin content, frozen [whether or not sliced/ in the form of Pellets]

5%

08

Dried makhana [whether or not shelled/ peeled]

5%

1001

Wheat & meslin

5%

1002

Rye

5%

1003

Barley

5%

1004

Oats

5%

1005

Maize Corn

5%

1006

Rice

5%

1007

Grain sorghum

5%

1008

Buckwheat/ millet & canary seed/ other cereals such as Jawar, Ragi, Bajra

5%

1101

Wheat/ meslin flour

5%

1102

Cereal flours other than wheat/ meslin/ maize flour, Rye flour etc.

5%

1103

Cereal groats, meal & pellet

5%

1105

Flour/ powder/ flakes/ granules/ pellets of potatoes

5%

1106

Flour of-

  • Dried leguminous vegetables of heading 0713 (pulses) [other than 1106 10 10 i.e., guar meal and 1106 10 90 i.e., guar gum refined split];
  • Sago/ roots/ tubers of heading 0714;
  • The products of chapter 8 i.e., tamarind/ singoda/ mango flour/ etc

5%

1701/1702

Jaggery of all types [including Cane jaggery i.e. gur/ palmyra jaggery], Khandsari sugar

5%

1904

Puffed rice [commonly known as Muri], flatted or beated rice [commonly known as Chira], parched rice [commonly known as khoi], parched paddy/ rice coated with sugar/ gur [commonly known as Murki]

5%

3101

Animal/ vegetable fertilizers [whether or not mixed together/ chemically treated], fertilizers by mixing or chemical treatment of animal/ vegetable products & organic manure

5%

53

Coir pith compost

5%

2009 89 90

Tender coconut water

12%

FAQs on GST applicability on 'pre-packaged and labelled Goods'

FAQs on GST applicability

Post going through all the above amendments, it is important to go through important clarifications as provided vide FAQs issued by the Government on 17th July 2022. The same is explained hereunder

  • GST applicability when a single package has a quantity of more than 25 kg/ 25 litre
    A single package of items like cereals, flour, pulses, etc. which contains a quantity of more than 25 kg/ 25 litre will not fall within the category of ‘pre-packaged and labelled’ commodity and hence the same will be exempt under GST.
  • GST applicability when retail packages (say for example – 10 retail packs of 10 kg each) are supplied in single package
    Since the retail packs are meant for eventual sale to the retail consumers, GST will be applicable on the supply of a single package which contains several retail packs.
  • Stages when GST will be applicable in case of pre-packaged and labelled commodities
    In the case of ‘pre-packaged and labelled’ commodities supply, GST will be applicable in the following stages-
  1. Manufacturer supplying to distributors;
  2. Distributors supplying to dealers;
  3. Dealers supplying to retailers; and
  4. Retailers supplying to individual consumers.

Importantly, on satisfying the input tax credit provisions/ conditions, the input tax credit under GST will be eligible to the manufacturers, wholesalers, retailers, etc.

Further, if the supplier is availing of either threshold exemption or benefit under the composition scheme. Then, in such a case, the same will be available to the eligible supplier in the usual manner.

  • GST applicability of retailers selling in loose quantities

Particulars

GST Taxability/ exemption

Goods purchased by the retailers from the manufacturer/ distributor/ dealers

If the goods are covered within the ambit of ‘pre-packaged and labelled’ commodities, GST will be applicable on the same.

Goods sold by the retailers to the individual consumers in loose quantity

Supply of commodity in loose quantity is not supply of pre-packaged commodity for the purpose of GST and hence GST will not be applicable on the same.

  • GST applicability when pre-packaged and labelled commodity is supplied for industrial/ institutional consumption
    As per rule 3(c) of the Legal Metrology (Packaged Commodities) Rules, 2011, pre-packaged and labelled commodities when supplied to industrial consumers or institution consumers, the same is excluded from the ambit of the Legal Metrology Act.

    Accordingly, as the supply is outside the purview of the Legal Metrology Act, the same, for the purpose of GST, will not be covered within the term ‘pre-packaged and labelled’. Accordingly, GST will be exempt when a pre-packaged and labelled commodity is supplied for industrial consumption or institutional consumption.
  • Miscellaneous clarifications-
    • GST will be applicable in case the rice millers, not making the required declaration, however, selling packages which contain 20 kg of rice.
    • Legal Metrology Act and rules thereunder prescribe some criteria satisfying which the supply will be excluded. Accordingly, such excluded commodities will not be treated as ‘pre-packaged and labelled’ for the purpose of GST and hence GST will be exempt.
    • Rule 26 of the Legal Metrology (Packaged Commodities) Rules, 2011 prescribes certain exemption. Accordingly, such exempted commodities will not be treated as ‘pre-packaged and labelled’ for the purpose of GST and hence GST will be exempt.
GST Return Filing

File your GST returns in minutes, not hours!

Get Live Demo and experience the simplicity by yourself.

  • GSTR 1 and GSTR 9C  all returns made automatically and faster
  • GSTR 1 data is auto populated
  • Auto-notification to your defaulting suppliers
  • 1-click data preparation

CA Poonam Gandhi

About the author

Poonam Gandhi is a Chartered Accountant and a Lawyer. She is a Professional Freelance Content Writer/ Editor and an Educator.

She masters in creating result-oriented as well as Search Engine Oriented Content. Currently, she is associated with some of the topmost leading sites of India.

She holds more than 3 years of experience in the content field. Before entering the content writing field, she possessed a wide practice experience of more than 9 years, specifically, in the field of Indirect Taxation.

Follow us: