HSN Code 0703 for Onions, Shallots, Garlic, Leeks, and Other Alliaceous Vegetables with GST Rate. The GST on farming-based products can be confusing, especially for everyday important things like onions, garlic, and leeks. Understanding HSN Code 0703 and its related GST rates can help you stay informed if you're a farmer, a trader, or even a curious consumer. This blog breaks it down in simple terms so you know exactly how taxes affect these kitchen staples.
What is HSN Code 0703? HSN Code 0703 is used to classify fresh or chilled onions, shallots, garlic, leeks, and similar vegetables for trade. It falls under Chapter 7, including edible vegetables, certain roots, and tubers. In India, the Goods and Services Tax (GST) rate for items classified under HSN Code 0703 is now set at 0% (NIL rate), meaning these fresh or chilled alliaceous vegetables are under the exempt GST category . Now, let’s see the GST rate for each HSN code for 0703-
HSN Code Description GST Rate
703 Onions, shallots, garlic, leeks, and other alliaceous vegetables (fresh or chilled) 0%
70310 Onions and shallots (fresh or chilled) 0%
7031010 Onions ( fresh or chilled) 0%
7031020 Shallots ( fresh or chilled) 0%
70320 Garlic ( fresh or chilled) 0%
70390 Leeks and other alliaceous vegetables ( fresh or chilled) 0%
7039000 Leeks and other alliaceous vegetables ( fresh or chilled) 0%
You Can Also Read: List of Exempted Goods
All Exemptions or Special Considerations Under the Goods and Services Tax (GST), fresh or chilled onions, shallots, garlic, green onions, and all other parts are classified under HSN code 0703 vegetables. This means no tax will be collected on your sales. However, some special cases should take into account certain considerations.
1. Pre Packaged and labeled products: If this vegetable is pre packaged and labeled, it can attract GST. The term "stuffed" refers to articles packed in a way that is suitable for retail sales. It is important to consult with the latest GST notification or tax professional to determine the applicable tax rate for such products.
2. Reverse Charge Mechanism (RCM): Generally, the supplier is responsible for paying for GST. However, after the RCM, responsibility shifted to the recipient. For agricultural products such as HSN 0703, if purchased directly by an unregistered farmer, the recipient (if registered following GST) must pay the tax with the reverse fee. This ensures tax compliance, even if the supplier is not registered under GST.
3. HSN Code Report: From April 1, 2021, businesses must mention the HSN code on their invoices:
a. 4-digit HSN code for businesses with annual sales of ₹5 crores turnover.
b. 6-digit HSN code for businesses that exceed the turnover of ₹5 crores.
This requirement aims to standardize tax invoicing and ensure uniformity in product classification.
Impact of GST on Onion & Garlic Prices Effect on Farmers 1. Since fresh onions and garlic are GST-exempt, farmers don’t have to pay taxes when selling them.
2. However, they don’t get Input Tax Credit (ITC) on fertilizers, pesticides, or transport costs, increasing their production expenses.
3. This can reduce their overall profit margins in the long run.
Effect on Traders & Suppliers 1. Traders benefit from zero GST on fresh produce, making it easier to buy and sell without extra tax burdens.
2. But if they deal with processed or packaged onions/garlic, they may attract GST, impacting pricing and demand.
3. Exporters might face complex tax compliance, especially with refunds on input costs.
Effect on Consumers Because fresh onions and garlic do not have GST, consumers pay additional taxes on these important basics. However, factors such as transportation costs, intermediaries, and rising seasonal prices could continue to affect retail prices.
Seasonal variability and tax impact Onion and garlic prices fluctuate naturally depending on seasonal production, monsoon, and storage conditions.
1. During shortages, traders often import onions, which might attract different tax rates, increasing costs.
2. If the government modifies GST rules for stored or processed forms, prices could shift.
GST Compliance for Traders & Suppliers GST Registration Requirements Who Needs to Register? 1. Traders and suppliers involved in fresh onions, garlic, and similar vegetables (HSN code 0703) do not require GST registration if they act within a single state.
2. If the dealer's annual sales exceed ₹40 lakh (for goods) or ₹20 lakh (for services), GST registration is required.
3. Interstate suppliers (intrastate sales) must register with GST even if the sales are across the border.
Filing GST Returns of Agricultural Products 1. Fresh onions, garlic, and similar vegetables are GST-free. This means that retailers and suppliers do not need to calculate GST for sales
2. However, if you process, package, or brand onion/garlic, you may need to collect and pay GST based on the applicable tax rate.
Common GST Returns for Traders 1. GSTR-1: Monthly return for outward supplies (sales) if dealing with taxable products.
2. GSTR-3B: Monthly summary return (only if registered under GST).
3. GSTR-9: Annual return (if turnover exceeds ₹2 crores).
No need to file returns if trading only in GST-exempt products like fresh onions and garlic.
"Stay Updated on GST for Food Products – Read Now !"
Conclusion Understanding GST with onions, garlic, and other allocations as part of HSN code 0703 is extremely important for farmers, dealers, and consumers. Fresh, cooled products are exempt from taxes, but preliminary packed versions attract GST and affect costs. Headers need to be aware of compliance requirements and farmers need to consider how input costs affect profitability. Seasonal price fluctuations and government intervention ensure improved financial planning for the agricultural sector through clarification through GST updates.
FAQ’s 1. Is there GST on fresh onions and garlic? No, fresh and chilled onions, garlic, and leeks under HSN 0703 are GST-exempt (0% tax).
2. Do prepackaged onions and garlic attract GST? Yes, prepackaged and labeled onions, garlic, and other similar vegetables are taxed at 5% GST.
3. Do traders need to file GST returns for fresh onions and garlic? No, since they are GST-exempt, traders dealing only in fresh produce don’t need to file GST returns.
People Also Ask 1. What happens if a trader sells both fresh and packaged garlic? They must charge 5% GST on packaged garlic while keeping fresh garlic sales tax-free.
2. Does the Reverse Charge Mechanism (RCM) apply to onions and garlic? Generally, no. But if bought from an unregistered supplier, the buyer may need to pay GST under RCM.
3. Have GST rates on onions and garlic changed recently? No major changes in fresh produce rates, but pre-packaged items were brought under 5% GST in 2022.
4. Can consumers see GST on their onion and garlic bills? No, for loose fresh produce. But if buying packaged onions/garlic, 5% GST may be included in the bill.
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