Classification of Agricultural Goods and Services: HSN and SAC

Classification of Agricultural Goods explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Classification decides the rate, the exemption and the credit position all at once — and in agriculture it does something else besides: the chapter a commodity sits in is a rough proxy for how much processing it has had, which is exactly the question the exemptions turn on.

Agricultural goods are classified under the Harmonized System of Nomenclature (HSN) — six digits for GST, eight for export and import. Unprocessed produce sits in Chapters 1 to 14; fertilisers and pesticides in Chapters 28, 29 and 31; machinery in Chapters 82, 84, 85 and 87, with rubber and plastic implements in 39 and 40; and processed produce in Chapters 9 to 24, 41 to 44 and 50 to 53. Services use the Services Accounting Code (SAC) under Chapter 99 — principally 9986 for support services to agriculture.

Why the chapter matters more here than elsewhere

The Handbook lists the ordinary reasons — tax liability, input tax credit, compliance and uniformity and transparency — and then adds the sector-specific one:

"Given the diverse range of goods and services involved in agriculture, proper classification is essential for determining the tax implications (if any) for farmers, agribusinesses, and other stakeholders in the sector."

The structural point is this. A commodity that stays in Chapters 1 to 14 is generally raw produce, generally exempt or at 5%, and generally "agricultural produce" for the service exemptions. A commodity that has moved into Chapters 9 to 24 has usually been processed enough to fail the primary-market test in para 2(d) — which is why tea (0902), roasted coffee, split pulses and jaggery all lose the warehousing and loading exemptions. What counts as agricultural produce →

The four goods groups

Agricultural produce — Chapters 1 to 14. "Cereals, pulses, fruits, vegetables, milk, eggs, fish and other agricultural produce are primarily classified under specific HSN codes from Chapter 1 to Chapter 14 depending on the type of goods."

Fertilisers and pesticides — Chapters 28, 29, 31. "Fertilizers, pesticides, and other agrochemicals are primarily classified under specific HSN codes in Chapter 28, Chapter 29, Chapter 31 and similar Chapters depending on their chemical characteristics and composition." Fertilisers at 5% or 18% →

Machinery and equipment — Chapters 82, 84, 85, 87, and 39, 40. "Tractors, harvesters, plows, irrigation equipment, and various other machinery are classified under specific HSN codes such as Chapter 82, Chapter 84, Chapter 85, Chapter 87. Rubber and plastic agricultural equipment might fall under Chapter 39 and Chapter 40, depending on their composition."

Processed produce and intermediates — Chapters 9 to 24, 41 to 44, 50 to 53. "Wide range of post-agriculture goods/products ranging from polished grains, split pulses, processed items (viz. flour, extracted oils, roasted coffee beans, cleaned bones/skin/fur, frozen edible items), leather sheets, etc."

Note the last group's spread. Textile fibres (50–53) and leather (41–44) are agricultural in origin but classified by what they have become — which is why raw cotton is 5201 while cotton fabric is elsewhere entirely.

How many digits, and when

Six digits for GST classification. "The HSN code consists of a six-digit code for goods… The first two digits represent the chapter, the next two digits represent the heading, and the last two digits represent the sub-heading."

Eight digits for cross-border. "The 8-digit HSN code is primarily used for export and import transactions to align with international standards, where… the last two digits are the tariff item."

The HSN is maintained by the World Customs Organization and used by "more than 200 countries, including India" — which is why a classification adopted for customs carries weight in a GST dispute over the same commodity.

The service side: SAC under Chapter 99

Services are classified under the Services Accounting Code, "a hierarchical classification system for services, similar to the HSN code for goods", all within Chapter 99.

The Handbook's groupings for agriculture:

Heading 9986 is the one to know. Entry 24 of Notification No. 11/2017-CT(Rate) describes it as "Support services to agriculture, hunting, forestry, fishing, mining and utilities", and its item (i) — support services to agriculture, forestry, fishing, animal husbandry — is rated Nil, carrying an Explanation that reproduces the seven limbs of entry 54 word for word, plus:

• (ii) "Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits and vegetables which do not change or alter the essential characteristics"; and
• (iii) "Carrying out an intermediate production process as job work in relation to cultivation of plants and rearing of all life forms of animals, except the rearing of horses."

Item (iii) is easy to miss and often decisive. Job work in relation to cultivation or animal rearing is Nil-rated under heading 9986, not taxed at the general job work rate.

Three commercial services that are not "support to agriculture"

Wholesale trade — heading 9961, at 18%. The entry's Explanation is precise: "This service does not include sale or purchase of goods but includes: Services of commission agents, commodity brokers, and auctioneers and all other traders who negotiate wholesale commercial transactions between buyers and sellers, for a fee or commission."

So a commission agent's fee is at 18% under 9961 — unless he is a commission agent for sale or purchase of agricultural produce, in which case limb (g) of entry 54 exempts him. The agent's own classification does not change; the exemption does.

Transport — heading 9965. Rail transport of goods at 5%; GTA services at 5% where the GTA does not opt to pay itself, and 5% or 18% where it does; transport of goods in containers by rail by a person other than Indian Railways at 5%.

Leasing of goods — heading 9973, at "the same rate of GST as applicable on supply of like goods involving transfer of title in goods."

Key takeaways

• HSN is six digits for GST, eight for export and import; the first two are the chapter.
• Chapters 1 to 14 hold unprocessed produce; 9 to 24, 41 to 44 and 50 to 53 hold processed produce and intermediates.
• Chapters 28, 29 and 31 hold agrochemicals; 82, 84, 85, 87 and 39, 40 hold machinery and implements.
• The chapter shift on processing tracks the loss of "agricultural produce" status under para 2(d).
• Heading 9986 carries the Nil rate for support services to agriculture, mirroring entry 54.
• Item (iii) of 9986 Nil-rates job work in relation to cultivation and animal rearing.
• Heading 9961 taxes commission agents and auctioneers at 18%, subject to the entry 54(g) exemption for agricultural produce.
• Heading 9973 taxes leasing of goods at the rate of the goods themselves.

Read next

• GST Rates on Agricultural Goods After Notification No. 9/2025
• Agriculture Exemptions: Entries 54 to 58 and "Agricultural Produce"
• GST on Leasing of Agricultural Land: Actual Use Decides

Disclaimer: Positions stated as on 5 September 2026, based on Notification No. 11/2017-Central Tax (Rate) (headings 9961, 9965, 9973 and 9986) and Notification No. 12/2017-Central Tax (Rate), as reproduced in the ICAI Handbook on Applicability of GST on Agricultural Sector (January 2026, law updated to 31 December 2025).