CBIC issues Clarifications on GST Rates for Pepper, Raisins, Popcorn, AAC Blocks, and SUVs [Read Circular]

The Central Board of Indirect Taxes and Customs (CBIC) issued an important clarification on the Goods and Services Tax (GST) rates and classification for several products, including pepper, raisins, ready-to-eat popcorn, autoclaved aerated concrete (AAC) blocks, and amendments related to vehicle ground clearance. These clarifications are based on the 55th meeting of the GST Council held on December 21, 2024.

GST Applicability on Pepper (Genus Piper)

The Board had received queries regarding the correct classification and tax rate for pepper, including concerns about whether dried pepper supplied by agriculturists is subject to GST.

Following the GST Council’s recommendations, it has been determined that all forms of pepper, including green (fresh), white, and black, fall under HS Code 0904 and are subject to a 5% GST rate. This tax rate is specified in S. No. 38 of Schedule I of Notification No. 1/2017-Central Tax (Rate) dated June 28, 2017.

For agriculturists growing and selling dried pepper directly from their plantations, Section 23(1)(b) of the CGST Act states that individuals engaged in farming activities do not need GST registration to sell produce grown on their land. Therefore, farmers’ supplies of dried pepper are exempt from GST.

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Tax Treatment for Raisins Supplied by Farmers

The Board was also asked to clarify the GST implications for raisins sold by agriculturists. According to the GST Council’s recommendations, the supply of raisins by a farmer is exempt from GST, and the farmer is not required to register under Section 23(1) of the CGST Act.

Taxation of Ready-to-Eat Popcorn

Several industry representatives sought guidance on the classification and applicable GST rate for ready-to-eat popcorn.

After reviewing the matter, the GST Council clarified that salted and spiced popcorn is covered by HS Code 2106 90 99.

• Unpackaged or non-labeled popcorn is taxed at 5% GST (as per S. No. 101A of Schedule I of Notification No. 1/2017-Central Tax (Rate)).
• Pre-packaged and labeled popcorn is subject to 12% GST (as per S. No. 46 of Schedule II of the same notification).
• Popcorn containing sugar (e.g., caramel popcorn) is considered a sugar confectionery item under HS Code 1704 90 90 and attracts 18% GST (as per S. No. 12 of Schedule III).

To resolve confusion over past tax treatments of salted and spiced popcorn, the GST Council has regularized all past transactions up to February 14, 2025, on an “as is where is” basis.

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GST on Fly Ash-Based Autoclaved Aerated Concrete (AAC) Blocks

Questions were raised regarding the appropriate classification and tax rate for autoclaved aerated concrete (AAC) blocks made with at least 50% fly ash.

• Fly ash-based bricks, aggregates, and blocks are categorized under HS Code 6815 and attract 12% GST (as per S. No. 176B of Schedule II of Notification No. 1/2017-Central Tax (Rate)).
• Other cement, concrete, or artificial stone articles (whether reinforced or not) fall under HS Code 6810 and are subject to 18% GST (S. No. 181 of Schedule III of the same notification).

The GST Council has ruled that AAC blocks containing more than 50% fly ash should be classified under HS Code 6815, making them eligible for the 12% GST rate.

Effective Date for Amended Tax on Vehicles Based on Ground Clearance

Concerns were raised about differences in interpretation regarding the effective date of amended entry 52B in Notification No. 1/2017-Compensation Cess (Rate), which governs compensation cess on motor vehicles.

Before the 50th GST Council Meeting, vehicles with an engine capacity over 1500cc, commonly known as SUVs and utility vehicles, were subject to a 22% compensation cess.

Following the 50th GST Council Meeting, Notification No. 03/2023-Compensation Cess (Rate) dated July 26, 2023, modified entry 52B. It now specifies that all utility vehicles, regardless of their name, will attract the 22% compensation cess if they meet the following conditions:

• Engine capacity exceeds 1500cc
• Length is greater than 4000mm
• Ground clearance (unladen) is at least 170mm

The GST Council confirmed that this amendment applies from July 26, 2023.

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