For many first-time sellers, GST becomes the biggest source of hesitation when starting an online business. Questions around registration, invoicing, tax rates, and compliance often delay launches or create expensive problems after listings go live. One topic attracts special attention among new marketplace entrepreneurs: GST-exempt products.
Certain goods in India can legally be sold without charging GST, provided they meet specific conditions under tax law. On large marketplaces such as amazon India, these categories sometimes look attractive because they appear to reduce pricing pressure and simplify tax handling.
However, GST exemption is not simply a box you tick while creating a product listing.
This article explains what GST-exempt actually means, whether registration is still required for marketplace sellers, which product categories are commonly exempt, what can change a product’s tax status, how to verify your own product before listing, and the mistakes that cause sellers the most trouble.
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What does GST-exempt actually mean?
Under India’s GST framework, goods fall into several tax treatments. GST-exempt goods are items on which no GST is charged at the point of sale, and sellers supplying such goods cannot claim input tax credit on purchases used to make those supplies.
This is different from nil-rated goods, which carry a zero percent tax rate but remain fully within GST, zero-rated supplies such as exports, and non-GST goods like petrol or alcohol for human consumption, which lie outside the GST system altogether.
Exemptions are notified through official schedules and circulars issued by the central board of indirect taxes and customs based on recommendations from the GST council.
The most important thing for sellers to understand is that GST exemption applies to the product, not automatically to the seller’s obligations on marketplaces.
Do you still need GST registration to sell exempted products on amazon?
This is where many new entrepreneurs misunderstand the law. Selling GST-exempt goods does not always remove the requirement to register under GST, especially when selling through an ecommerce operator. In most cases, marketplace sellers are expected to obtain GST registration even if their goods fall in exempt schedules, subject to notifications that the government issues from time to time.
In practice, this usually means that you may not charge GST on exempt goods, but you may still need GST registration, you must issue a proper bill of supply, marketplace-collected tax at source may still apply, and returns may still need to be filed.
Because these rules evolve through official notifications, sellers should always confirm the latest position before onboarding or adding new product categories.
Common GST-exempt product categories in India
Most GST exemptions in India are notified by the Central Board of Indirect Taxes and Customs based on recommendations of the GST Council.
These exemptions usually apply only when goods are sold in specific forms, such as:
unprocessed or minimally processed
unpacked or loose
unbranded
falling under notified HSN classifications
Sellers must always verify the current notification before listing products on marketplaces.
Food items
The following are commonly exempt when sold in natural, unprocessed, and unbranded form:
cereals
edible fruits and vegetables (not frozen or processed)
edible roots and tubers
fish and meat (not packaged or processed)
tender coconut
jaggery
unprocessed tea leaves
unroasted coffee beans
seeds
ginger
salt
turmeric
betel leaves
papad (plain, not branded or packaged)
non-branded flour, gram flour, whole flour
non-branded natural honey
unpacked paneer
puffed rice
eggs
dairy products such as milk, curd, lassi, buttermilk
aquatic feed
poultry and cattle feed
Important note
Items like bread often attract GST when branded or packaged, and supplements are generally taxable except in very specific notified animal-feed forms. These should not be treated as automatically exempt.
Raw materials
These goods are commonly notified as exempt when supplied in raw or traditional form:
raw silk
jute
wool
silk waste
khadi fabric
cotton used for khadi yarn
raw jute fibre
firewood (as notified)
charcoal (as notified)
handloom fabrics
These exemptions are largely designed to support farmers, weavers, and artisan communities.
Tools and instruments
Certain socially important goods may be exempt, depending on classification:
hearing aids
hand tools such as spades and shovels
tools used for agricultural work
handmade musical instruments
aids and implements for physically challenged people
Miscellaneous goods
Examples frequently appearing in exemption schedules include:
books, maps, newspapers, journals
non-judicial stamps and postal items
drawing or colouring books for children
live animals (except horses)
beehives
human hair
bangles (traditional forms)
chalk sticks
contraceptives
earthen pots
pooja items such as idols, bindi, kumkum
kites
indian national flag
gandhi topi
organic manure
vaccines (as notified)
Classification matters
Some items in this list become taxable when heavily processed, premium-positioned, or sold under branded packaging. Always match the exact HSN code and current GST notification before assuming exemption.
When does GST becomes applicable
One of the most expensive mistakes sellers make is assuming that once a product is exempt, it will always remain exempt.
GST can become applicable if the product is sold under a registered brand name, is pre-packaged and labelled for retail sale, undergoes processing or value addition, is imported, is bundled with taxable services, or falls under a different HSN code than expected or is selled across the country from one state to another.
For example, loose rice sold in bulk may be exempt, while branded, packaged rice carrying an MRP can attract GST.
Understanding these triggers is essential before locking inventory, suppliers, or packaging designs.
What amazon still checks even for exempt products
GST exemption does not remove other regulatory obligations.
Depending on the category, amazon may still require food safety registration for edible goods, bureau of Indian standards certification for regulated items, legal metrology compliance for packaged products, product safety declarations, and proper invoicing or shipping documentation.
In short, tax exemption does not mean regulation-free selling.
Who should consider GST-exempt categories?
These categories can be suitable for new sellers testing demand, agricultural aggregators, book distributors or small publishers, artisan groups and cooperatives, and traders dealing in essential commodities.
However, sellers building private-label brands, processed food lines, cosmetics, supplements, or imported goods should be cautious, since these often fall into taxable slabs despite appearing similar.
How to verify whether your product is GST-exempt
Before listing any item, follow a disciplined verification process.
Describe the product precisely, including its form and packaging. Identify the correct HSN code. Check the GST rate schedule. Review exemption notifications issued by CBIC. Confirm packaging and branding rules. Read amazon’s category requirements carefully. Speak to a qualified tax professional before uploading listings or procuring bulk stock.
This approach prevents audits, penalties, and listing suspensions that often arise from casual classification.
Why this matters for your business
GST-exempt products can improve price competitiveness and simplify invoicing, but incorrect classification can quickly trigger notices, blocked accounts, or financial losses.
Sellers who treat GST carefully build credibility with marketplaces, lenders, and institutional buyers. That credibility becomes invaluable when scaling beyond small volumes or seeking working capital support.
Disclaimer
This article summarises publicly available GST and marketplace guidance for educational purposes only. It does not replace official notifications or platform policies. Readers should verify the latest rules with government sources and professional advisors before listing any product.