Vermicompost HSN Code

Understanding the HSN Code for Vermicompost and its GST

Vermicompost, the nutrient-rich organic fertilizer produced by earthworms, is gaining immense popularity among farmers and gardeners due to its eco-friendly nature and significant benefits for soil health and plant growth. For businesses and individuals involved in the production or trade of vermicompost in India, understanding its Harmonized System of Nomenclature (HSN) code and the applicable Goods and Services Tax (GST) is essential for seamless operations and compliance.

The HSN Code for Fertilizers

The HSN (Harmonized System of Nomenclature) is a global classification system for goods, used to standardize customs duties and taxes worldwide. In India, Chapter 31 of the HSN is dedicated to “Fertilizers.” Within this chapter, various types of fertilizers, including organic ones, are categorized.

Vermicompost’s Place in the HSN System

Based on the provided data, vermicompost is specifically categorized under a broad HSN code for animal or vegetable fertilizers:

• Animal or Vegetable Fertilisers, whether or not mixed together or chemically treated; Fertilisers Produced by the Mixing or Chemical Treatment of Animal or Vegetable Products:
  • HSN Code: 31010099
  • GST Rate: 5%
  • Effective Date: July 1, 2017

This HSN code encompasses a wide range of natural and organic fertilizers, and vermicompost, being a product of animal (earthworm) and vegetable decomposition, perfectly fits this description. The term “Other” in the sub-heading further confirms its inclusion where more specific codes might not exist.

Why is Accurate HSN Classification Crucial for Vermicompost?

For everyone dealing with vermicompost, correctly classifying it under HSN 31010099 offers several advantages:

• GST Compliance: It ensures you charge and pay the correct GST, avoiding potential penalties or legal issues. The 5% rate is favorable for promoting organic farming practices.
• Seamless Invoicing: The HSN code must be accurately reflected on all GST invoices, which is a mandatory requirement for registered businesses.
• Input Tax Credit (ITC): Correct classification facilitates the smooth claiming of ITC on inputs used in vermicompost production or trading.
• Transparent Trade: Standardized classification aids in easier identification and movement of goods in both domestic and international trade.

The Significance of 5% GST for Vermicompost

The relatively low 5% GST rate on vermicompost underscores the government’s support for organic farming and sustainable agricultural practices. This lower tax burden makes vermicompost more accessible and affordable for farmers, encouraging its adoption over chemical fertilizers and contributing to healthier soil and produce.

Businesses dealing with vermicompost should always ensure they are using the latest official GST notifications and HSN classification guides to maintain compliance and take advantage of the favorable tax rates.