What does pre-packaged and labelled mean for GST?
It means a retail pack of 25 kg or 25 litre or less, packed before the customer arrived, that the Legal Metrology law requires to carry a label with its declarations. Three tests, and the pack must pass all three to attract 5%.
| Test | What it asks | Fails the test when |
|---|---|---|
| Retail, up to 25 kg or 25 litre | Is the pack meant for retail sale and 25 kg / 25 litre or less? | The bag is 26 kg, 30 kg or 50 kg |
| Pre-packed | Was the quantity fixed and packed without the buyer present (LM Act s.2(l))? | You weigh the dal into a bag in front of the customer |
| Labelling required | Must the pack carry Legal Metrology declarations? | The pack is outside the labelling rules, such as a pack for an institutional buyer |
Note the word "required". A pack that should carry the declarations but does not (no MRP, no net quantity printed) does not become nil. The test is whether the law requires the label, not whether the label is actually there.
The declarations themselves come from the Packaged Commodities Rules: the name and address of the packer, the common name of the product, the net quantity, the month and year of manufacture and the retail sale price (MRP), among others. If a pack carries these, or the law says it must, treat it as pre-packaged and labelled. This is also why a shop that packs its own pouches should print a proper label: the pouch is taxed at 5% once it is pre-packed, and the label keeps you right under the Legal Metrology law as well. Our note on MRP rules for shops covers the price side.
Is a 26 kg rice bag, or a bag my shop packs, taxed at 5%?
A 26 kg bag is above the 25 kg limit, so it is outside the definition and billed at nil. A 5 kg bag your shop fills in the morning and labels for sale is pre-packed, so it is 5%.
| Case | Pre-packaged and labelled? | GST |
|---|---|---|
| Rice weighed out of an open sack in front of the customer | No: the buyer is present, quantity not pre-determined | Nil |
| Branded 10 kg or 25 kg rice bag with MRP and net weight | Yes | 5% |
| Sealed 26 kg or 50 kg rice bag | No: above 25 kg | Nil |
| 5 kg bags packed by your shop in advance, with a printed label | Yes: packed without the buyer, quantity fixed | 5% |
| Plain bag filled and weighed at the counter | No | Nil |
| Branded 1 kg packs sold by a wholesaler to a retailer | Yes: the pack is meant for retail sale, at every stage | 5% |
| Pack made for a hotel or canteen kitchen (institutional buyer) | Usually no: outside the retail labelling chapter | Ask your CA |
Based on the definition in Notification 9/2025 and 10/2025-CT(Rate) and Legal Metrology Act s.2(l). A July 2024 draft proposed changing Rule 3 of the Packaged Commodities Rules; the GST definition carries its own 25 kg / 25 litre cap whatever the labelling rules say.
Two things often surprise shop owners. First, the wholesaler charges 5% on a carton of 1 kg packs even though nobody in that sale is a household buyer: the pack is meant for retail sale. Second, packing loose stock into your own labelled pouches to sell faster at Diwali changes the rate on those pouches from nil to 5%.
Which items have a different GST rate when loose and when packed?
Mainly cereals, flours, pulses and a few staples: 5% when pre-packaged and labelled, nil when loose. Some lookalike items do not have this split, so check the list before you set rates.
| Item | HSN | Pre-packaged and labelled | Loose |
|---|---|---|---|
| Rice | 1006 | 5% | Nil |
| Wheat, atta, maida, suji, dalia, jowar, bajra, ragi | 1001 / 1101 / 1103 / 1008 | 5% | Nil |
| Dal and pulses, besan | 0713 / 1106 | 5% | Nil |
| Poha, murmura | 1904 | 5% | Nil |
| Gur (jaggery), khandsari | 1701 | 5% | Nil |
| Makhana | 08 | 5% | Nil |
| Honey | 0409 | 5% | Nil |
| Curd, lassi, buttermilk | 0403 | 5% | Nil |
| Tender coconut water | 2009 | 5% | Nil |
| Salt | 2501 | Nil | Nil |
| Milk | 0401 | Nil | Nil |
| Paneer | 0406 | Nil | Nil |
| Sugar | 1701 | 5% | 5% |
| Namkeen, bhujia | 2106 90 | 5% | 5% |
| Badam, pista, akhrot | 0802 | 5% | 5% |
From the RichPOS GST rate list (Notification 9/2025 and 10/2025-Central Tax (Rate)). Flavoured yoghurt is 5% packed or not.
Can loose and packed items go on the same bill?
Yes. A registered shop can put nil and 5% lines on one tax invoice; selling taxable and exempt goods to an unregistered customer, it may issue one invoice-cum-bill of supply (CGST Rule 46A).
What matters is that each line carries the right rate, so the tax summary at the bottom of the bill splits nil and 5% sales. Those totals flow into GSTR-1 and GSTR-3B, where exempt and nil-rated sales are reported apart from taxable ones. A bill made of loose items only, with no taxable line, is a bill of supply; see bill of supply vs tax invoice.
How do I set up loose and packed items in billing software?
Make two items, not one: the same HSN, different GST rate. Then the counter cannot bill packed dal at nil or loose dal at 5% by mistake.
- Create the loose item Name it clearly, e.g. "Toor dal loose (kg)", HSN 0713, GST 0%, sold by the kg.
- Create the packed items One item per pack or brand, e.g. "Toor dal 1 kg pack", HSN 0713, GST 5%, unit piece, with its own barcode.
- Keep stock apart Buy loose dal into the loose item and branded packs into the packed item, so stock and GST both stay right.
- If you repack When you pack loose stock into labelled pouches, move the quantity from the loose item to a packed item; the pouches now carry 5%.
- Check the GST report At month end, the sales report by HSN and rate should show 0713 at both nil and 5%. That is what your CA needs.