Pre 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.
Two identical sacks of rice can carry different GST. Not because the rice differs, but because one of them is a pre-packaged and labelled commodity and the other is not.
That distinction has existed since July 2022. What changed with GST 2.0 is that the expression is now anchored to a definition in another statute entirely — and the ICAI FMCG sectoral guide flags it as one of the most significant developments affecting the sector.
Notification No. 10/2025-Central Tax (Rate) dated 17 September 2025 amended the Explanation below the GST rate notifications so that "pre-packaged and labelled" carries the meaning assigned under section 2(1) of the Legal Metrology Act, 2009. GST liability on packaged food therefore depends on whether the package satisfies the Legal Metrology Act and its Rules — a packaging-law test, applied by a tax officer.
What the Legal Metrology definition requires
Section 2(1) of the Legal Metrology Act, 2009 defines a "pre-packaged commodity" as a commodity which, without the purchaser being present, is placed in a package of whatever nature, whether sealed or not, so that the product contained in it has a predetermined quantity.
Three elements, each of which has to be present:
- Packed in the absence of the purchaser. A shopkeeper who weighs out two kilos in front of the customer is not pre-packaging.
- Placed in a package — sealed or not. The absence of a seal does not save it.
- A predetermined quantity. The quantity was fixed before the buyer arrived, not by the buyer.
The "and labelled" limb pulls in the Legal Metrology (Packaged Commodities) Rules, 2011, which require declarations of name and address of the manufacturer or packer, common name of the commodity, net quantity, month and year of manufacture, retail sale price and consumer care details.
Why the tax consequence is sharp
For staples — rice, wheat flour, pulses, cereals, dried leguminous vegetables, jaggery, puffed rice, curd, lassi, paneer, honey — the rate entry is written conditionally. Sold loose or unpackaged, the item is generally exempt. Sold pre-packaged and labelled, the same item attracts 5%.
That is not a rate difference between two products. It is a rate difference between two ways of selling the same product.
The exclusions matter as much as the definition
The Packaged Commodities Rules exclude certain packages from their application, and because the GST Explanation borrows the Legal Metrology meaning, those exclusions flow through into the rate determination.
The most consequential in practice:
- Packages above 25 kg or 25 litres. Rule 3(a) of the Packaged Commodities Rules excludes packages of commodities containing a quantity of more than 25 kg or 25 litres from Chapter II. A 50 kg bag of rice therefore sits outside the pre-packaged-and-labelled test, and the exempt entry can apply. This is why bulk agricultural trade and retail packing are taxed differently on the same grain.
- Packages for industrial or institutional consumers. Also excluded, subject to the conditions in the Rules — but the exclusion depends on the package actually being intended for such a consumer, not merely being large.
- Multi-piece packages. Where the individual pieces inside are themselves pre-packaged, the analysis has to run at both levels.
The ICAI guide's caution is that these are Legal Metrology questions decided by GST officers, and the two authorities do not always read them the same way.
Where businesses actually get caught
Retail packing at the store. A grocery chain that pre-weighs pulses into 1 kg pouches overnight, with a printed label, has created a pre-packaged and labelled commodity. The fact that it happens in a shop rather than a factory is irrelevant — the test is whether the purchaser was present.
Unsealed pouches. "Whether sealed or not" is express. Folding rather than heat-sealing does not take the package out.
Institutional supply that ends up in retail. A package cleared as an industrial or institutional supply, then diverted to retail, fails the exclusion at the point it is diverted.
Just over or just under 25 kg. A 24.5 kg bag and a 25.5 kg bag are on opposite sides of the line. Fill-weight tolerance becomes a tax control.
Own-brand labelling by a distributor. A distributor who repacks bulk stock into branded retail packs is a "packer" for Legal Metrology purposes, and has created a pre-packaged and labelled commodity even though the manufacturer did not.
The compliance response
- Map every SKU against the three section 2(1) elements and record the conclusion. This is a documented determination, not an assumption.
- Keep the fill-weight records for anything near 25 kg or 25 litres.
- Where the industrial or institutional exclusion is relied on, keep evidence of the class of buyer — purchase orders, contracts, delivery destinations.
- Treat a change in packing format as a rate event, requiring sign-off before the line runs.
- Where the position is genuinely arguable, an advance ruling under s.97 on classification and applicability of a notification is available.
Key takeaways
- Notification 10/2025-CT(Rate), 17.09.2025 ties the GST expression to s.2(1) of the Legal Metrology Act, 2009.
- The test is packed without the purchaser present, in a package, with a predetermined quantity.
- Sealed or not is irrelevant.
- Loose sale of staples is generally exempt; pre-packaged and labelled sale is generally 5%.
- Packages above 25 kg or 25 litres and genuine industrial or institutional packs fall outside.
- Retail repacking and own-brand distributor packing both create pre-packaged commodities.
Read next
- GST 2.0: The Two-Rate Structure Explained
- The 40% GST Demerit Rate: What Actually Falls Under It
- HSN and SAC Codes: Classification Under GST
- GST on Food and Beverages: Restaurant vs Packaged
Disclaimer: Positions stated as on 5 September 2026, based on the ICAI GST Sectoral Guide on Fast-Moving Consumer Goods (2026). Verify the current Explanation in the applicable rate notification and the Packaged Commodities Rules before relying on an exclusion.