Chicory Plants & Roots: GST Rates and HSN Code 6012 Food production has many ways that include using chicory or the root of a chicory plant for use in coffee as well as for medicinal use. There is a need for businesses involved with growing, processing or selling chicory plants or chicory roots to be aware of the GST rates and the HSN Code for the product classified under HSN Code 6012. This guide will discuss how GST is applied to chicory, its classification under HSN Code 6012, as well as your compliance requirements so that you do not make a mistake with your taxes.
What Are Chicory Plants and Roots Chicory is a relative of the daisy plant that is mainly grown for its roots, which are typically roasted and ground up to produce an excellent flavor and aroma that make them useful as either an addition or substitute for coffee. Chicory is known not only for its culinary properties but also for its importance as an ingredient in pharmaceuticals and supplements because of its various digestive and medical qualities. In addition to providing food, chicory is also utilized in making inulin - a type of fibre that aids digestion - and both the leaves and roots of the chicory plant are edible.
The leaves can be eaten fresh in salads (sometimes with other vegetables) while the roots are by far the most commercially significant part of the plant. Chicory plants and chicory roots are assigned to the HSN code classification system for GST purposes, and compliance with tax regulations will depend on the level of processing and particular product type that establish the level of processing and product type (HSC) associated with the chicory product.
Refer this: GST Rate & HSN Code for Vegetable Products - Chapter 6
HSN Code for Chicory Plants & Roots Chicory plant and root classification falls into several HSN codes based upon their stage of processing as well as their final form – i.e. live plants, raw roots and processed items; GST classification is determined by their type.
Product Description HSN Code Category Chicory plants and roots 0601/0602 (live plants) / 1212 (roots) Agricultural products
Note: While "6012" is commonly referenced as a general code, the proper classification will depend upon both how the chicory is processed/conditioned, as well as how it will be utilized.
Live chicory plants would be classified in section 6 (HSN 0601/0602) of the Harmonised System for codes relating to live trees/plants/roots for growing and transferring from a source. The dried and raw forms of chicory roots are classified under section 12 (HSN 1212) of the Harmonised Codes of Vegetable Products that are grown for use or further processing.
When chicory has been partially processed by methods such as roasting, grinding and/or converting into powdered form, it may bear a completely alternate HSN Code Classification (such as section 21 for Food Preparation). Consequently, it is important for businesses to assess which form of chicory product is being used to ensure they have correctly classified it when paying taxes (GST) and to avoid future tax filings with funding agencies.
Refer here: Plants & Parts of Plants HSN Code & GST Rate
GST Rates for Chicory Plants & Roots The GST rate varies depending on the product form:
Product Type HSN Code GST Rate Fresh chicory plants 0601/0602 NIL (Exempt) Chicory roots (fresh, unprocessed) 1212 NIL (Exempt) Chicory roots (dried) 1212 NIL (Exempt) Chicory leaves (fresh vegetables) 709 NIL (Exempt) Chicory roots (cut/sliced, unprocessed) 1212 NIL (Exempt) Roasted chicory roots 2101 5% Chicory powder (coffee substitute) 2101 5% / 18% Chicory extract or essence 2101 18% Chicory-based coffee mixtures 2101 5% / 18% Packaged/Branded chicory products 2101 5% / 18%
When Does GST Apply to Chicory GST on chicory is based on how it is classified. Products that are considered agricultural produce do not incur GST unless they have been further processed (i.e. roasted, ground up and/or packaged with an accompanying brand). Therefore, you should consult the appropriate tax regulation for determining the GST status of individual chicory items.
GST exempt items Fresh chicory plants Raw un-processed chicory(root) Naturally-dried chicory(root) without any value added to them. All these items qualify as agricultural produce and therefore have no significant processing performed on them; they will not be charged GST for their supply.
Taxable chicory items Chicory (roasted) Chicory (powdered) Chicory extract Chicory based beverages/mixtures After chicory is processed, the supply of any finished good (either in its entirety or in part) will incur GST. The applicable GST will depend on what type of finished good it is, how much processing has been done to that finished good.
In simple terms, No Processing or little/no Processing = "No GST" and Value-added or Processed Goods = "GST applies".
Input Tax Credit (ITC) on Chicory Products Businesses selling taxable chicory products can receive Input Tax Credits (ITC) for business-related costs, which helps lower the company’s total tax payments. ITC may be claimed on:
Purchases of raw materials Purchases of packaging materials Transportation and logistics services Machinery/equipment used in processing (if applicable) on taxable products However, ITC is not eligible for use in relation to exempt supplies, such as live chicory plants and unprocessed roots. If you sell both exempt and taxable products, you have to allocate the amount of ITC you can receive by proportion to your total sales according to GST rules. Proper documentation and valid tax invoices will be required for your ITC claims to be valid and to avoid compliance issues.
Common Mistakes to Avoid When working with chicory roots/plants and keeping in mind the applicable GST obligations, check these areas for errors:
Misclassifying chicory root as processed products rather than raw; Incorrectly charging GST (goods and services tax) on exempted agricultural products; Misclassifying products by not using the HSN code correctly; Not keeping accurate records; and Not separating raw and processed products. Even a minor classification error could trigger penalties and/or notices from regulatory bodies.
Conclusion Fresh chicory plants and roots are heavily exempt from GST if sold as raw agricultural products. However, processed chicory products will incur a GST expense based on the type of product sold. It is important to know which one of the following HSN Codes applies to the chicory product being sold (0601, 0602, or 1212) as well as what the GST rate is, in order to comply with the regulations. It is important for businesses to properly classify their chicory products to avoid penalties and maintain good records in order to operate efficiently.
Suggested Read: Plants & Parts of Plants HSN Code & GST Rate
FAQs 1. How much GST is charged on chicory roots? Chicory roots (raw) are tax exempt (0% GST). Chicory products that are prepared may have a 5% or 18% GST charged depending on how they were prepared (processed).
2. What is the appropriate HSN number classification of chicory? Chicory (live plants) 0601/0602; chicory (roots) 1212; chicory (prepared) 2101.
3. Are fresh chicory plants taxed on GST? Fresh chicory plants are considered to be agricultural products and are therefore exempt from GST and any GST is imposed.
4. Can a business claim ITC when purchasing chicory products? Yes, if the chicory product is tax applicable (processed). No, if chicory products are exempt (fresh).
5. Why is it important to have a correct HSN number for chicory? GN number classifications must have the correct GST rate, to be compliant with GST law and to avoid penalties.
.png)
-compressed.jpg)
.jpg)
.png){kind=small}
.png){kind=small}
.png){kind=small}
.png){kind=small}
-compressed.jpg)
