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November 26, 2024

Udeetta Sarma

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Mushroom HSN Code and GST Rate - 7123

On account of their nutritional importance and versatility, mushrooms have already established a distinct place in Indian agriculture and cuisine. Businesses dealing with button mushrooms, oyster mushrooms etc., must know the HSN code for mushrooms and GST rate on them.

In this blog, we are going to explore it deeply and clear everything to the suppliers, manufacturers as well as consumers.

What is the HSN Code for Mushrooms in India?

Mushroom and its HSN code is 7123 This classification is internationally established and provides a basis for product identification in foreign trade and taxation. The HSN code is generally used for GST compliance within India.

Breakdown of HSN Code 7123:

71: Vegetables, roots and tubers stocked up for retail sale

23: Refers to mushrooms in preserved form only, like dry or other types.

To know more about GST rates related to plants or parts of plants you can also refer to ‍Plants & Parts of Plants HSN Code & GST Rate.

Mushroom GST Rate in India

Whether they are fresh mushrooms, or dried/processed, it determines the rate of GST tax on mushrooms. Here’s a detailed look:

Fresh Mushrooms:

GST Rate: 0% (Exempted)

Fresh Mushrooms (including button mushrooms) fall under unprocessed agricultural produce. So, they are not charged GST.

Dried or Processed Mushrooms:

GST Rate: 5%

GST of 5% on dried mushrooms, both in powdered form and whole. Among them are value-added mushroom products used for culinary purposes.

Canned or Preserved Mushrooms:

They are fungi closed normally in cans.

GST Rate: 12%

Mushrooms preserved by any other process such as canning, freezing or pickling are subjected to 12% GST Since these products are heavily processed, they feature in this tax slab.

Button Mushroom HSN Code and GST Rate

Button mushrooms, one of the most common varieties available in India, fall under the multiple HSN code 7123 category of mushroom. So, the GST rate on mushrooms, whether button type or otherwise will depend upon their sale state -

Fresh Button Mushrooms: Exempt (0% GST)

Dried Button Mushrooms: 5% GST

Preserved Button Mushrooms: 12% GST

They are produced in the states of Punjab, Himachal Pradesh and Haryana on a commercial scale. Button mushrooms have a specific tax classification well-documented that needs to be understood by the traders.

You might also be interested in Coconut HSN Code & GST Rate - 0801. Click here to check it out.

Mushroom Business: Importance of HSN Codes & GST Rates

Incorrect classification under inappropriate HSN codes can have serious repercussions for businesses. Hence, careful sourcing of correct HSN becomes essential to ensure:

1. Compliance with GST laws.

2. Correct GST return filing.

3.No penalties for misclassification.

Moreover, for companies to price their products competitively and void disputes at the time of tax audits

Key Considerations for Mushroom Taxation in India

1. GST on Mushroom Farming:

Mushroom growing falls under GST-exempt farming activities. Provided they only sell fresh mushrooms, farmers are not required to register for GST.

2. Impact on Exporters:

Mushroom sales fall under a category of items called "zero-rated supplies." Since exporters can recover a large amount during supply through this refund on input GST, it elevates profitability levels for them with the inclusion of GST.

3. Concerning Compliance For Mushroom-Based Products:

For instance, if the business is engaged in producing value-added mushroom products, such as ready-to-eat/heat mushrooms or mushroom soups, then classification of its output and applicable GST rates will need to be complied with and followed.

The Role of IT In Mushroom Tax Compliance

There are advanced GST filing platforms and accounting software that have simplified this process for businesses:

1. Automatically classify products under the right HSN codes.

2. Determine GST Rates Based on the Types of Products

3. File GST returns without any mistakes.

Mushroom Taxation: One of the Future Trends

India's GST council is famous for changing tax slabs based on industry demands. Mushroom growers and businesses can avoid a misalignment of changes by keeping abreast of any modifications. The classification of such mushroom-based health products & supplements under GST may also change as their popularity goes up in future.

Conclusion

Understanding the mushroom HSN code and GST rates can enable businesses to work seamlessly and avoid noncompliance that may result in hefty fines. However, considering the rapid growth of the mushroom sector and the higher demand for mushrooms, proper tax compliance will be critical for all stakeholders involved in the industry.

Simplify Your Mushroom GST Compliance with Swipe!

Ready to Simplify Your GST Compliance of Mushroom Products? Swipe assists in the rapid categorisation of your goods under the appropriate HSN codes, calculating GST payable rates and filing returns. From harvest to sale, our easy-to-use platform can reduce time spent and minimize errors in your business for fresh, dried, or preserved mushrooms. Over thousands of businesses rely on us to make tax management easy! Instead, Spend More Time Building Your Business. Book Now and Experience the smarter GST solutions designed for your business! Let us keep you compliant, efficient and ahead of the game!

FAQs

1. What is the India mushroom HSN code?

Mushroom HSN Code is 7123. This includes all kinds of mushrooms, whether raw or processed. This ensures consistency and facilitates the classification of mushroom produce due to tax.

2. What GST applies to fresh mushrooms?

GST on fresh mushrooms is exempt. This is because they are an agricultural product and generally, such purchases fall into tax exemptions. This provides an exemption to ease the burden on farmers and mushroom producers.

3. Are Dried Mushrooms Subject to GST?

Indeed, dried mushrooms are considered to be taxable supplies at the rate of 5% under GST. This is true for mushrooms that are dehydrated whole or powdered. Dried mushrooms, which are processed products, come with a lower GST rate but remain pocket-friendly.

4. What is GST for preserved and canned mushrooms?

GST on mushrooms that are preserved and canned is 12% This premium rate is because they are classified as processed foods, which are generally subject to a higher tax. The processing provides additional value that justifies a higher rate of GST.

5. Should a mushroom farmer accept GST registration?

Fresh mushroom growers (Harvesters and tribunals) are exempt from registering for GST. This exemption is in place since agricultural cultivators do not Levy GST when raising raw agricultural produce. This makes compliance paperwork less of a burden for small farmers.

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