GST on Export of Pre-Packaged Rice: AAR Gujarat Clarifies Rules for 5% Rate and Concessions
The present application (No. Advance Ruling/SGST&CGST/2024/AR/34), dated November 21, 2024, has been filed by a company named M/s. Olam Agri India P Limited (applicant) before the Gujarat Authority for Advance Ruling Goods and Services Tax (GST), D/5, Rajya Kar Bhavan, Ashram Road, Ahmedabad-380 009.
The applicant is registered under the GST department and has a registered address at the Office of the Assistant Commissioner of State Tax, Unit-6, Range-2, Division-1, Ahmedabad, hence possessing GSTIN 24AAACO5798A1ZJ.
The case has been heard on three dates: 29.07.2025, 22.05.2025, and 08.04.2025. The applicant is involved in the business of exporting various agricultural products, including rice. The applicant supplies rice to its customers in pre-packaged and labelled packages weighing up to 25 kg.
Now, the applicant has some questions regarding his business and hence sought the present advance ruling no. GUJ/GAAR/R/2025/32, dated September 06, 2025.
Questions Asked by Applicant:
The applicant, M/s. Olam Agri India P Limited has asked the following questions seeking the AAR Gujarat:
“Question 1. Whether GST would be leviable on the export of pre-packaged and labelled rice upto 25 kg to a foreign buyer?
Question 2. Whether GST would be applicable on the supply of pre-packaged and labelled rice upto 25 kg to the exporter on a ‘bill to ship to’ basis, i.e., bill to the exporter and ship to the customs port. Does the exporter ultimately export the rice to a foreign buyer?
Question 3. Whether GST would be applicable on the supply of prepackaged and labelled rice upto 25 kg to the factory of the exporter. The exporter will export the rice?
Question 4. Whether GST would be applicable on goods procured from another party at a concessional rate of 0.1% (0.05% + 0.05%) as per notification 40/2017 or 41/2017 & the export of the goods directly to foreign buyers for prepackaged and labelled rice upto 25 kg at 5%?”
Answers Given by AAR Gujarat:
The Gujarat Authority for Advance Ruling Goods and Services Tax (GST) has given the following answers to the questions of the applicant:
Answer 1. Yes, GST will be imposed on the export of pre-packaged and labelled rice upto 25 kg to foreign buyers at the rate of 5%, provided the applicant chooses to export the rice on payment of IGST.
Answer 2. Yes, GST will be imposed on the supply of pre-packaged and labelled rice upto 25 kg to the exporter on a ‘bill to ship to’ basis, i.e., bill to the exporter and ship to the customs port. The exporter ultimately exports the rice to a foreign buyer at the rate of 5%.
Further stated, if an exporter buys pre-packaged and labelled rice (up to 25 kg) on a ‘bill to ship to’ basis, meaning the bill is made out to the exporter but the rice is shipped directly to a customs port for export, they can get the benefit of very low GST/IGST (0.1%). This is allowed under Notification No. 41/2017-IT(R) and Notification No. 40/2017-CT(R), provided the exporter follows all the rules and conditions mentioned in these notifications.
Answer 3. Yes, GST will be imposed on the supply of prepackaged and labelled rice upto 25 kg to the factory of the exporter, wherein the exporter will export the rice at the rate of 5%.
Answer 4. Yes, GST will be imposed on the goods procured from the other party at a concessional rate of 0.1% (0.05% + 0.05%) according to notification 40/2017 or 41/2017, and the goods will be exported directly to foreign buyers for prepackaged and labelled rice upto 25 kg at the rate of 5%.
GST rate of 5% will apply to the export of pre-packaged and labelled rice of upto 25 kg to foreign buyers, which has been purchased by claiming notification No. 40/2017-CT(Rate) or notification No. 41/2017-IT(Rate) (both dated 23-10-2017) and all the conditions in those notifications are followed. Also, under Section 16 of the IGST Act, 2017, the exporter has the option to export this rice without paying IGST, by giving a Bond or LUT.
However, GST at 5% applies only if the exported rice qualifies as “pre-packaged and labelled” according to the explanation given in Notification No. 1/2017-IT(R) or 1/2017-CT(R) (dated 28-06-2017), as amended.
Citation: M/s. Olam Agri India P Limited (AAR Gujarat); Advance Ruling No. GUJ/GAAR/R/2025/32; 06/09/2025
