GST on Cold Storage in India — Agricultural Exemption, Rates & ITC Rules

Updated: 3 June 2026 | GST Act, Notification 12/2017-CT(Rate), Entry 54

Cold storage for agricultural produce is fully exempt from GST (Entry 54, Notification 12/2017). Cold storage for non-agricultural goods — medicines, beverages, ice cream, processed food — attracts 18% GST. Refrigerated (reefer) transport is taxed at 12% GST. Construction of cold storage buildings is always 18% GST regardless of intended use.

EXEMPT

Cold Storage of Agricultural Produce — Zero GST
Non-agricultural goods storage: 18% GST | Reefer transport: 12% GST | Construction: 18% GST

GST Rate Summary — Cold Storage Services

Service / Activity	GST Rate	Legal Basis	ITC for Client
Cold storage — agricultural produce (fruits, vegetables, grains, spices, etc.)	EXEMPT (0%)	Notification 12/2017-CT(Rate), Entry 54	N/A — no GST charged
Cold storage — medicines, pharma, vaccines	18%	SAC 996721 — default rate	Eligible ITC
Cold storage — ice cream, beverages, processed food	18%	SAC 996721	Eligible ITC
Cold storage — chemical compounds	18%	SAC 996721	Eligible ITC
Warehousing — agricultural produce	EXEMPT (0%)	Notification 12/2017-CT(Rate), Entry 54	N/A
Warehousing — non-agricultural goods	18%	SAC 996721	Eligible ITC
Refrigerated transport (reefer truck / GTA)	12%	SAC 9965 — goods transport	Eligible ITC
Cold chain logistics (integrated)	12% or 18%	Depends on principal supply	Eligible ITC (taxable portion)
Manufactured ice (sold as goods)	18%	HSN 2201 — ice, not agricultural	Eligible ITC
Cold storage construction (works contract)	18%	SAC 9954 — works contract services	Blocked credit (Sec 17(5)(d)) if for exempt supply

What Qualifies as "Agricultural Produce" for GST Exemption?

The GST exemption for cold storage hinges on whether the goods stored qualify as "agricultural produce." Under GST, "agricultural produce" means any produce of agriculture on which no further processing has been done, or where processing such as cleaning, grading, sorting, and packing has been done as is usually done by a cultivator or producer before sale in the primary market. The following are typically exempt:

Item	Status	Notes
Fruits and vegetables (fresh)	Exempt	Standard sorting/grading allowed
Grains, cereals, pulses	Exempt	Including rice, wheat, maize
Spices (raw)	Exempt	Unprocessed form
Cotton (ginned/baled)	Exempt	Specifically mentioned in notification
Milk (fresh, raw)	Exempt	Agricultural produce status
Ice cream	Taxable (18%)	Manufactured product — not agricultural
Frozen meals / processed food	Taxable (18%)	Further processing done
Seafood (raw, fresh)	Exempt	If not further processed
Seafood (frozen, processed)	Taxable (18%)	Processing beyond primary stage
Pharmaceuticals	Taxable (18%)	Manufactured goods, not agricultural

ITC for Cold Storage Operators — Proportionate Reversal

Cold storage operators who provide both exempt services (agricultural storage) and taxable services (non-agricultural storage) must apply proportionate ITC reversal under Rule 42/43 of the CGST Rules. The formula is: ITC to be reversed = (Total ITC on common inputs) × (Exempt turnover / Total turnover). This reversal must be computed every month based on provisional figures and reconciled annually. Operators providing only agricultural cold storage cannot claim any ITC and effectively bear the full GST cost on their own inputs (electricity, refrigerants, maintenance, etc.) — this is a key cost consideration.

Frequently Asked Questions

Is cold storage for agricultural produce exempt from GST?

Yes, cold storage services provided specifically for agricultural produce are fully exempt from GST. This exemption is granted under Entry 54 of Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017, which exempts "services by way of storage or warehousing of rice, cotton, ginned or baled; cereals, pulses, fruits, nuts and vegetables, spices, copra, sugarcane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured tobacco, betel leaves, tendu leaves, coffee and tea" and "agricultural produce." The term "agricultural produce" means any produce of agriculture on which either no further processing is done or such processing is done as is usually done by a cultivator or producer — for example, cleaning, grading, sorting, packing. Cold storage of potatoes, onions, apples, mangoes, dairy products like milk and paneer (when considered agricultural produce), seeds, and similar items falls under this exemption. Importantly, the exemption applies to cold storage services (service of storing in a cold chain) — not to the construction of the cold storage building, which attracts 18% GST as a works contract service. Cold storage operators must carefully determine the nature of goods stored to apply the correct GST treatment.

What GST rate applies to cold storage of non-agricultural goods?

Cold storage services for non-agricultural goods attract GST at 18%. This covers a wide range of products that are commercially stored in temperature-controlled environments but do not qualify as agricultural produce. Examples of non-agricultural goods attracting 18% GST on cold storage include: pharmaceutical products and medicines (vaccines, biologics, temperature-sensitive drugs); beverages and processed juices; ice cream and frozen desserts; processed and packaged food items (frozen meals, ready-to-cook products); chemical compounds requiring temperature control; seafood that has been processed or packaged beyond raw/natural state; and confectionery. The 18% GST applies as a supply of service (SAC 996721 — storage and warehousing services). The cold storage operator must raise a GST invoice with 18% GST (9% CGST + 9% SGST for intra-state, or 18% IGST for inter-state). The recipient (business entity storing goods) can claim Input Tax Credit (ITC) on the 18% GST paid, provided the cold storage expense is incurred for the furtherance of their taxable business. The classification between agricultural and non-agricultural goods requires careful assessment in cases like seafood (exempt if fresh/natural, taxable if processed) or dairy (exempt for fresh milk, taxable for ice cream).

What is the GST on refrigerated transport (reefer trucks)?

Refrigerated transport services (commonly called reefer transport) using temperature-controlled vehicles such as refrigerated trucks, reefer containers, or cold chain logistics vehicles attract GST at 12% under SAC 9965 (Goods Transport Services). This is distinct from the 18% GST on cold storage (static warehousing). The 12% GST applies regardless of whether the goods being transported are agricultural or non-agricultural. However, if the transport is purely of agricultural produce by road and qualifies under the general agricultural transport exemption (Notification 12/2017-CT Rate, Entry 18 — "services by way of transportation of goods by road except the services of a goods transport agency"), it may be exempt. A reefer truck operating as a Goods Transport Agency (GTA) charges 12% GST. The recipient of GTA services can avail ITC on the 12% GST. Cold chain logistics providers offering integrated services (pick-up, transport, temporary storage, delivery) must carefully classify each component — transport attracts 12% GST and static cold storage attracts either exempt (agricultural) or 18% (non-agricultural). Many operators charge 12% GST on the composite cold chain logistics service treating transport as the principal supply.

Can cold storage operators claim Input Tax Credit on GST paid?

Cold storage operators can claim Input Tax Credit (ITC) on GST paid for inputs and input services used in their business, subject to the restrictions under Section 17 of the CGST Act. If the cold storage operator provides services to both exempt clients (agricultural produce storage) and taxable clients (non-agricultural storage), they fall under a mixed or composite supply scenario and must apply proportionate ITC reversal under Rule 42 and Rule 43 of the CGST Rules. The proportion of ITC attributable to exempt supplies (agricultural cold storage) must be reversed and cannot be claimed. ITC is available on: electricity used for refrigeration (if GST-registered supplier provides it), refrigeration equipment and spare parts, maintenance and repair services, construction of cold storage units (subject to Section 17(5)(d) — blocked credits on immovable property construction are generally not available unless the cold storage owner is a works contractor), and technology/software used for inventory management. Clients who use cold storage services for taxable business activities can claim ITC on the 18% GST paid to cold storage operators. Pharmaceutical companies, food processing companies, and beverage manufacturers storing goods in cold warehouses can credit the input GST against their output GST liability.

Is the construction of a cold storage building subject to GST?

Yes, construction of a cold storage building attracts 18% GST as a works contract service under SAC 9954. This applies whether the cold storage is built for personal use or commercial purposes. Works contract services (construction with material supply) are always taxable at 18% under GST — there is no exemption for construction of cold storage infrastructure even if the facility will ultimately be used for exempt agricultural produce storage. This is an important distinction: the service of storing agricultural produce in a cold storage is exempt from GST, but the construction of the cold storage facility itself is not exempt. The contractor who builds the cold storage will charge 18% GST on the entire contract value (materials + labour). The cold storage owner (if registered under GST) can claim ITC on this construction GST only if the cold storage is used for providing taxable services (non-agricultural storage). If the cold storage is used exclusively for exempt agricultural produce storage, the ITC on construction costs must be reversed under Section 17(2) read with Rule 42. This is one of the biggest tax costs for cold storage operators focused on agricultural supply chains. The installation of refrigeration equipment and plant/machinery within the building may be treated separately as supply of goods (18% GST on equipment).

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