New

Published on:

August 27, 2025

Swipe Admin

Blog |

Explore GST

GST Rate & HSN Code 7095 for Mushrooms and Truffles

Suresh runs a specialty food distribution company out of Delhi importing very rare and exotic truffles, and then distributing gourmet mushroom two top tier restaurants across India Last year he was served many GST notices plus penalty payments for more than RS 1.2 lakh because he incorrectly classified processed mushroom products using HSN 7095 instead of what was proper

India has never had a gourmet food distribution sector enjoying such growth, which elevates mushroom and truffles to mainstream restaurants, hotels and households in urban settings. Many businesses have mismanaged the proper HSN Code 7095 classification making compliance difficult, wrong taxes deducted and the Input Tax Credit (ITC) opportunity was squandered.

Farmers, traders, importers and food processors must understand the right GST rate, classification rules, define compliance farmers room and truffle in order to avoid costly errors and maximize tax benefits. When did Teriyendrum?

Also Read: Plants & Parts of Plants HSN Code & GST Rate

Understanding HSN Code 7095: Classification Framework

What is HSN Code 7095?

HSN code 7095 has a specific definition of, “Mushroom and Truffles or chilled” in the International Harmonized System of Nomenclature, an international trade and domestic taxation It requires such definition.

Products Covered Under HSN Code 7095:

1. Fresh truffles (Tuber species)

2. Wild mushrooms in the fresh state

3. Chilled mushrooms in the fresh state

Key Exclusions:

1. Fresh but dried, preserved, or canned mushrooms (these have different HSN codes)

2. Mushroom powders and extracts

3. Processed mushroom products to which ingredients are added

Importance of Global Trade

HSN code 7095 provides standardized identification of products to keep the international trade compliant. For an Indian importer and exporter to classify products correctly adds an extra layer to smooth customs clearance and comply with requirements of the destination country.

Complete GST Rate Structure for Mushrooms and Truffles

Current GST Rates (2025)

Product Category	HSN	GST	Rationale	Business Impact
Fresh Mushroom	7,095	0%(Exempt)	Agricultural produce	Lower consumer prices
Fresh Truffles	7,095	0%(Exempt)	Primary agricultural product	Export competitiveness
Dried Mushroom	712	5%	Processed agricultural product	Moderate tax burden
Canned/Preserved	2003	12%	Value added processed food	Higher retail prices
Mushroom Powder	2106	18%	Processed food ingredient	Premium pricing required

Reasons for Fresh Mushrooms to Have GST Free Status

Policy Objectives:

1. Support for Agriculture: Attraction for expanding mushroom growing sector

2. Perishable Product Advantage: To alleviate tax on time sensitive products

3. International Competitiveness: To ensure, at least in domestic markets, have comparative prices with similar imports

4. Nutrition Security: Supporting access to affordable protein built from nutrition potential of mushrooms

5. Economic and Societal Impacts: GST exemption has led to 35% increase in fresh mushroom consumption, and 50% increase in export volume since GST enacted.

Input Tax Credit (ITC) Rules and Implications

ITC Eligibility Framework

For Fresh Mushroom Traders (HSN 7095):

1. No GST Charged: Since fresh mushrooms are exempt, no output GST liability

2. ITC Limitation: Cannot claim ITC on inputs as final supply is exempt

3. Cost Consideration: Input costs become part of final product cost

For Processed Mushroom Manufacturers:

1. GST Applicable: 5%-18% depending on processing level

2. Full ITC Available: Can claim ITC on all business inputs

3. Cash Flow Benefit: Input tax recovery improves working capital

Strategic ITC Planning

Mixed Supply Businesses: Companies dealing in both fresh and processed mushrooms should maintain separate accounting to optimize ITC benefits and ensure compliance.

Input Cost Management:

1. Fresh mushroom businesses: Factor input GST into pricing

2. Processed food companies: Leverage ITC for competitive pricing

Business Impact Across Different Sectors

For Mushroom Farmers and Cultivators

Benefits:

1. Zero GST burden on fresh produce sales

2. Lower compliance requirements for direct sales

3. Better profit margins encouraging expansion

Considerations:

1. Input costs (equipment, fertilizers) include GST without recovery

2. Need proper documentation for exempt sales

For Importers and Exporters

Import Advantages:

1. Fresh mushrooms/truffles import at 0% IGST under certain conditions

2. Reduced landed cost for premium varieties

3. Competitive pricing for domestic distribution

Export Benefits:

1. Zero-rated supply status for GST purposes

2. Full refund of input taxes paid

3. Letter of Undertaking (LUT) facility available

For Food Processors and Restaurants

Processing Industry Impact:

1. Raw material (fresh mushrooms) at 0% GST reduces input costs

2. Processed products attract higher GST rates

3. Value addition strategy affects overall tax liability

Restaurant and Hotel Usage:

1. Lower input costs for fresh mushrooms improve margins

2. Menu pricing benefits from GST exemption

3. Processed mushroom products increase operational costs

Compliance Essentials and Best Practices

Documentation Requirements

For Exempt Supplies (HSN 7095):

1. Proper invoicing without GST calculation

2. Clear product description mentioning "fresh" condition

3. Maintenance of exempt supply records

4. Regular reconciliation for audit purposes

For Taxable Processed Products:

1. Correct HSN classification (0712, 2003, 2106)

2. Appropriate GST rate application

3. Input-output tax reconciliation

4. Timely return filing GST with accurate classification

Common Compliance Mistakes

1. Misclassification Errors: Using HSN 7095 for processed mushroom products instead of correct codes.

2. Condition Confusion: Claiming exemption for slightly processed or dried mushrooms.

3. ITC Mis claims: Attempting to claim ITC on inputs for exempt fresh mushroom sales.

Current Development and Future Scopes (2024-25)

Government Policies

Continued Exemption Support:

1. GST Council maintains 0% rate on fresh mushrooms/truffles

2. Enhanced focus on agricultural export promotion

3. Startup ecosystem support for mushroom cultivation

Technology Integration:

1. Digital documentation requirements for large businesses

2. E-way bill compliance for interstate movement

3. Online GST registration simplification for farmers

Market Trends Impact

Premium Product Growth:

1. Increasing demand for exotic mushroom varieties

2. Organic mushroom segment expansion

3. Value-added product development

Export Opportunities:

1. Growing international demand for Indian mushrooms

2. Quality certification requirements for exports

3. Logistics infrastructure development for perishable exports

Conclusion

Understanding the HSN Code 7095 and its associated GST implications is important for businesses selling mushrooms and truffles. The 0% GST exemption on fresh products is great to have, and the potential standard tax rates on your processed product will take management of compliance.

Key Business takeaways: you must maintain clear separation between your fresh and processed products, you should also look to take advantage of ITC benefits anytime you can, and proper HSN classification will help avoid penalties. The Government will continue to support alternative food directions through the elimination of existing taxes creating fantastic opportunities for growth in India's growing gourmet food supply.

Success Strategy: Take advantage of the exemption as it relates to fresh products, and build a strong compliance management structure for your processed variety. This strategy captures as much profit as possible while remaining compliant on all fronts.

FAQs

1. What is the current GST rate on fresh mushrooms under HSN 7095?

Supplier fresh mushrooms under HSN Code 7095 incur no GST (zero percent rate), as they are treated as primary agricultural produce.

2. Are imported truffles exempt from GST in India?

Yes, supplier fresh truffles are GST-exempt under HSN Code 7095. However, the supplier would still have to pay applicable custom duties and correctly classify.

3. What is the GST rate for canned or processed mushrooms?

Processed mushrooms fall under different HSN codes - i.e. dried mushrooms (HSN 0712) bear a 5% GST; a canned/preserved mushroom (HSN 2003) bears a 12 GST.

4. Can mushroom traders claim Input Tax Credit on their purchases?

If mushroom traders only sell freshly packaged mushrooms (HSN 7095), the last supply is exempt; thus, they cannot claim an ITC. However, they can claim the full ITC if they process the mushrooms prior.

5. How are mushroom exports treated under GST?

Mushroom exports are zero-rated supplies under GST, hence, the exporter can recover/input tax credit on input taxes incurred and use the Letter of Undertaking (LUT) facility.

6. Why does the Indian government provide GST exemption on fresh mushrooms?

The government provides GST exemption on fresh mushrooms to support fitness in agriculture, and makes nutritious food more affordable to the general public, general farming practices more readily adopted in India, and allows Indian agricultural goods to be more competitive in the world export market.

Featured Posts

GST on Overseas Drop Shipment Transactions: Key Insights

What is a Sales Invoice?

How to Start a Hardware Business in India

Section 194H Of Income Tax - TDS on Commission and Brokerage

CGST on E-Commerce Services for Intra-State Supplies

Orunodoi Scheme: Financial Aid for Families in Assam

Empanelment for Special Audit with Delhi GST Department

Explanation of Rule 37 of CGST SGST Rules

Featured Posts

Looking for a billing software?

Quick Links

Learn More

Testimonials