Chilli HSN Code

Understanding Chilli HSN Codes

Chilli, the fiery soul of countless cuisines worldwide, comes in many forms – fresh, dried, crushed, ground, or as part of a prepared sauce. For businesses dealing with this versatile spice in India, understanding its Harmonized System of Nomenclature (HSN) code and the corresponding Goods and Services Tax (GST) rates is crucial for accurate tax compliance. Let’s explore the various classifications of chilli.

Understanding Chilli’s Place in the HSN System

The HSN (Harmonized System of Nomenclature) provides a standardized system for classifying goods globally, which India utilizes for GST. Chillies, depending on their form and processing, can fall under different chapters:

• Chapter 09: Coffee, Tea, Mate and Spices This chapter is the primary classification for dried or crushed/ground fruits of the genus Capsicum (which includes chillies) or of the genus Pimenta. This is where most forms of chilli you’d find as a spice or ingredient will be located.
• Chapter 07: Edible Vegetables and Certain Roots and Tubers Fresh chillies are typically classified here as edible vegetables. For example, green chillies often fall under HSN 0709.
• Chapter 15: Animal or Vegetable Fats and Oils and their Cleavage Products; Prepared Edible Fats; Animal or Vegetable Waxes This chapter includes oils derived from chillies, like capsicum oil.
• Chapter 21: Miscellaneous Edible Preparations Prepared chilli products, such as chilli sauce or mixed condiments, find their place in this chapter.

HSN Codes and GST Rates for Chilli Products

The data provided outlines key HSN codes and GST rates for various chilli forms:

• Dried or Crushed or Ground Fruits of the Genus Capsicum (Chilli as a Spice):
  • HSN Code: 0904 (general heading)
  • GST Rate: 5%
  • Effective Date: July 1, 2017 This applies to whole dried chillies, as well as chilli powder and crushed chillies. Specific sub-headings exist, such as 09042110 for dried chillies “of genus capsicum” (neither crushed nor ground) and 09042211 for “chilly powder.”
• Chillies or Capsicum Oil (Fixed Vegetable Oil):
  • HSN Code: 15159030
  • GST Rate: 5%
  • Effective Date: July 1, 2017 This HSN code specifically covers the oil extracted from chillies.
• Chilli Sauce (Prepared Edible Preparation):
  • HSN Code: 21039020
  • GST Rate: 12%
  • Effective Date: November 15, 2017 This demonstrates how a processed product containing chilli (like a sauce) attracts a higher GST rate than the raw or simply dried spice.

It is important to note that while the provided data primarily focuses on processed or dried forms of chillies and their derivatives, fresh green chillies generally fall under HSN 07096010, typically with a 5% GST rate as a fresh vegetable.

The Crucial Role of Accurate HSN Classification

Correct HSN classification for chilli products is not just a matter of following rules; it’s fundamental to sound business practices:

• GST Compliance: It ensures you apply the correct GST rate to your products, preventing tax discrepancies and potential penalties.
• Accurate Invoicing: HSN codes are a mandatory inclusion on GST invoices for all registered businesses, enhancing transparency and aiding reconciliation.
• Input Tax Credit (ITC): Proper classification helps businesses accurately claim ITC on raw materials or inputs used in producing chilli-based products.
• Streamlined Trade: Standardized HSN codes facilitate smoother customs procedures for both domestic and international trade, reducing delays and potential issues.

Businesses dealing with chilli in any form should always consult the most recent official GST notifications and HSN classification guides or seek professional advice to ensure their operations align with the latest regulations.