GST rates and HSN code 1202 for Ground Nuts

Groundnuts, known as peanuts, are among the most consumed seeds in Indian households and industries. They play an important role in agriculture, trade, and consumption. However, it is essential for a business dealing with groundnuts to know the applicable GST rates and HSN codes.

In this blog, we will discuss the GST rates and the HSN code applicable to groundnuts, especially concerning HSN code 1202.

What is the HSN Code?

The Harmonized System of Nomenclature (HSN) is an internationally accepted system for classifying goods. It was entered to make sure the taxation is uniform and that the process of goods identification is also a little streamlined. Indian GST implemented the HSN code in the broader category, which decides tax rates for various products.

While 1202 is the corresponding HSN code for groundnuts, which includes peanuts in their shelled, unshelled, and broken form.

The Role of Groundnuts in India's Economy and Agriculture

In India, Groundnuts are of great economic and agricultural significance. India, being the third largest producer of peanuts in the world, plays a vital role in domestic consumption and export. Gujarat, Andhra Pradesh, Tamil Nadu and Karnataka are the major states that grow groundnuts that support millions of farmers. Groundnuts are another important oilseed, providing a major input to edible oils, peanut-based snacks and other value-added products.

The implementation of GST has simplified the taxation process for groundnut traders, minimizing complications in interstate trade transactions. Now, uniform HSN classification under GST further simplifies exports, making Indian groundnuts more competitive in the global export market. Besides, value addition in processing industries—peanut butter and roasted peanuts—has opened up new unit opportunities.

Yet, despite these benefits, smallholder farmers frequently struggle to access formal markets, storage infrastructure, and market price stability. With the increasing demand for groundnuts and the compliance of GST for farmers, the support of initiatives, subsidies, and cooperatives by the Government is vital for farmers to benefit from it.

HSN Code 1202 and Its Relevance to Groundnuts

The HSN code 1202 specifically pertains to groundnuts. Here’s how it is categorized:

1202.10: Groundnuts, in-shell, not roasted or not cooked otherwise.
1202.20: Groundnuts, not roasted or otherwise cooked, shelled, whether or not broken

Correct classification is imperative for the taxpayer to determine the tax incidence as per the provision of GST. If the products are misclassified, compliance issues and penalties could arise.

GST Rates for Groundnuts

The GST rates for groundnuts under HSN code 1202 vary based on their form and use. Let’s break it down:

Category	Details	HSN Code	GST Rate
Raw Groundnuts	Ground-nuts, not roasted or otherwise cooked, whether or not shelled or broken	1202	5%
- In Shell	- H.P.S: Of Seed Quality	12021011	5%
	- H.P.S: Other	12021019	5%
	- Other: Of Seed Quality	12021091	5%
	- Other: Other	12021099	5%
- Shelled	- Kernels, H.P.S.	12022010	5%
	- Other	12022090	5%
- Seed	- H.P.S.	12023010	5%
	- Other	12023090	5%
- In Shell	- H.P.S.	12024110	5%
	- Other	12024190	5%
- Shelled	- Kernels, H.P.S	12024210	5%
	- Kernels, Other	12024220	5%
	- Other	12024290	5%
Processed Groundnuts	Includes roasted, salted, or otherwise processed groundnuts. The GST rate varies based on processing.	Varies	5% to 18%
Groundnut Oil	Groundnut oil, derived from peanuts, is categorized as a processed product.	Separate HSN	5%Category	Details	HSN Code	GST Rate
Raw Groundnuts	Ground-nuts, not roasted or otherwise cooked, whether or not shelled or broken	1202	5%
- In Shell	- H.P.S: Of Seed Quality	12021011	5%
	- H.P.S: Other	12021019	5%
	- Other: Of Seed Quality	12021091	5%
	- Other: Other	12021099	5%
- Shelled	- Kernels, H.P.S.	12022010	5%
	- Other	12022090	5%
- Seed	- H.P.S.	12023010	5%
	- Other	12023090	5%
- In Shell	- H.P.S.	12024110	5%
	- Other	12024190	5%
- Shelled	- Kernels, H.P.S	12024210	5%
	- Kernels, Other	12024220	5%
	- Other	12024290	5%
Processed Groundnuts	Includes roasted, salted, or otherwise processed groundnuts. The GST rate varies based on processing.	Varies	5% to 18%
Groundnut Oil	Groundnut oil, derived from peanuts, is categorized as a processed product.	Separate HSN	5%

This table provides an easy-to-read format summarizing the GST implications for groundnuts and related products.

You might also be interested in Rice HSN Code & GST Rate - 1006.

Why Is Knowing the GST Rate Important?

Businesses need to know the correct GST rates for groundnuts, which makes the knowledge of the same essential.

Help in Compliance:

Errors related to GST returns caused by the wrong classification may lead to penalties and legal implications.

Price Their Products Accordingly:

Companies that understand the classical tax burden can price their products accordingly and stay competitive.

Streamlined Input Tax Credit (ITC):

The businesses getting ITC paid taxes on inputs used for manufacturing processed products such as peanut butter or groundnut oil

Impact of GST on Groundnut Trade

Hence, a complete transition from multiple taxation to GST has happened in taxing in India, along with many taxation eliminations. For groundnut traders, GST provided a lot of benefits like:

Unified Tax Model:

The multiple state taxes were replaced with uniform tax rates, making the interstate business in groundnuts relatively easier.

Compliance in the Processing Units:

Taxation on processed groundnuts motivates more players to enter the value addition market of peanuts.

Increased Export Potential:

The UN centralizes & gives uniform HSN codes like 1202, making it easier for Indian groundnut exporters to comply with International trade.

However, small farmers and those who trade in raw groundnuts continue to be exempt from GS, T ensuring they are not burdened with any additional tax.

For details on the Coconut HSN Code & GST Rate (0801), including tax implications and compliance tips, check out our comprehensive guide!

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Conclusion

This blog aims to provide a comprehensive overview of the GST rates and HSN codes for groundnuts so that both businesses and consumers can gain a better understanding of what they are dealing with. Groundnuts in their raw (dried) form are classified under HSN code 1202 in the GST regime, which means they do not occur at the GST rate of 0%, benefiting the farmers and traders, as per the Union Ministry of Finance statement. The uniform tax system under GST has also made trade easy, boosted exports and allowed value addition in the groundnut industry. By keeping an eye on these classifications, a business can boost its possibilities significantly and also enhance the growth of the agriculture and processing sectors in India.

FAQs

1. Which HSN code is applicable for Groundnuts?

Groundnuts fall under the HSN code of 1202. This includes any raw groundnut, in-shell or shelled.

2. Are Raw Groundnuts Exempt from GST?

Yes, raw groundnuts are agricultural products and thus exempt from GST (0% GST).

3. What is the roasted/salted peanuts GST Rate in India?

Roasted or salted peanuts are processed products and usually carry a GST slab of 12% to 18%, depending on the classification of the product.

4. Do the HSN codes for groundnut oil and groundnut-based products remain the same?

No, the GST rates on groundnut oil and a slew of processed groundnut products are charged under a different HSN code, attracting GST ranging between 5% to 18%.