GST on Rice Bran: Rate Increased from Nil to 5% in January 2018
At its meeting on 18 January 2018, the GST Council recommended applying 5% GST to rice bran other than de-oiled rice bran, regardless of its end use. The change took legal effect on 25 January 2018 through rate notifications.
Why was the GST rate changed?
Before the 25th GST Council meeting, rice bran falling under HSN 2302 used as specified animal feed could qualify for a Nil rate, whereas rice bran for other uses attracted 5% GST. This distinction created different treatment based on the intended use of the same product. The Council agreed to apply 5% GST to rice bran generally, while maintaining a separate Nil treatment for de-oiled rice bran.
The change was recommended on 18 January 2018, but a Council recommendation is not itself a tax notification. The rate was given effect from 25 January 2018 under the statutory notification framework.
GST rate change: product and HSN details
| S. No. | HSN / tariff heading | Description | Earlier treatment | Rate from 25 January 2018 |
|---|---|---|---|---|
| 1 | 2302 | Rice bran (other than de-oiled rice bran) | Nil for qualifying feed use; 5% for other uses | 5% GST (2.5% CGST + 2.5% SGST for an intra-State taxable supply; 5% IGST for an inter-State taxable supply) |
| 2 | 2306 (as clarified for the exemption) | De-oiled rice bran | Separate treatment | Nil GST under the specified exemption effective 25 January 2018 |
The original article identified only rice bran other than de-oiled rice bran as the product whose rate increased from Nil to 5%. The second row is included to explain the important exemption distinction, not to suggest that de-oiled rice bran was subjected to a 5% increase.
Applicable legal provisions and notifications
Section 9(1), Central Goods and Services Tax Act, 2017
Section 9(1) provides for the levy of central tax on intra-State supplies of goods or services, at rates notified by the Government on the recommendations of the GST Council, subject to the statutory limits and conditions. Corresponding State GST provisions govern the State tax component.
Section 5(1), Integrated Goods and Services Tax Act, 2017
Section 5(1) provides for the levy of integrated tax on inter-State supplies. The applicable IGST rate is prescribed through the relevant Integrated Tax (Rate) notification and its amendments.
Section 11, CGST Act and Section 6, IGST Act
These provisions empower the Government, on the recommendations of the GST Council and subject to the statutory conditions, to exempt specified supplies by notification. They are relevant when determining whether de-oiled rice bran qualifies for the notified Nil treatment.
The principal central rate schedule is Notification No. 1/2017-Central Tax (Rate), dated 28 June 2017. The January 2018 changes included Notification No. 6/2018-Central Tax (Rate), dated 25 January 2018, and amendments to the exemption schedule under Notification No. 7/2018-Central Tax (Rate) of the same date. Corresponding IGST notifications must be considered for inter-State supplies.
Rice bran versus de-oiled rice bran
Rice bran is a milling by-product derived from rice. De-oiled rice bran is the residue remaining after extraction of oil. Their descriptions and relevant tariff headings must not be treated as interchangeable merely because both may be used in animal feed.
In particular, the CBIC rate schedule clarifies that the de-oiled rice bran exemption applies to goods falling under heading 2306 with effect from 25 January 2018. Actual classification should be supported by the product's composition, manufacturing process, invoice description and the applicable tariff provisions.
How to check the GST rate for a transaction
- Confirm whether the goods are ordinary rice bran or de-oiled rice bran and determine the correct HSN heading.
- Check the date of supply and the version of the applicable rate or exemption notification in force on that date.
- Determine whether the supply is intra-State or inter-State and apply the corresponding CGST/SGST or IGST treatment.
- Verify any later amendments, exemptions and clarificatory circulars before issuing an invoice or claiming input tax credit.
Official government references
- CBIC: GST goods and services rate schedules (see rice bran entry 103B and de-oiled rice bran exemption).
- CBIC: Central Tax (Rate) notifications (see Notifications 6/2018 and 7/2018, dated 25 January 2018).
- CBIC: Integrated Tax (Rate) notifications (see January 2018 corresponding amendments).
- GST Council: 50th meeting minutes, recording the earlier 2018 decision and its effective date.
- CBIC Circular No. 179/11/2022-GST, concerning classification and rate clarifications for certain goods.
Legal note: The historical notification position should be read with all amendments applicable to the particular tax period. This guide is informational and does not replace the text of the law or professional advice for a specific supply.