Article Explains GST GST Implications On Poultry Industry and Poultry Feed and further explains GST on Sale of Live Poultry, Sale of Poultry Meat, Sale of Poultry Eggs, Hatchery Services, Job Work related to Poultry Industry, Commission Payments related to Sale/Purchase of Goods related to Poultry Industry and Loading/Unloading Charges, Packing & Storage Charges for Poultry Goods.
Page Contents
1.01 Introduction
Poultry Industry is one of the fastest growing sectors in the economy. The size of the poultry industry is around Rs. 2,000 billion and is expected to grow to around Rs. 4,400 billion by 2024-25. India is also the largest producer of broiler meat and eggs. The average placement of broiler birds in the country is around 70 million birds per week. In this placement, the organised sector plays a very crucial role. Broiler meat production in the country has been increasing @ 8% (approx.) p.a. The poultry industry generates a large number of employment opportunities in the country and is very important for the national economy.
The poultry industry is largely exempted by the provisions of the Central Goods & Services Tax Act, 2017. However, there are certain issues that need detailed analysis and explanations. In this article, we shall study the provisions related to the poultry industry and analyse the same in the light of provisions contained in the GST Law.
1.02 Sale of Live Poultry
Sale of live poultry is made in the following situations:
a) Sale by hatcher to poultry farmer for further rearing of Day-Old Chicks.
b) Sale by poultry farmer to trader of broiler chicken for sale to retailers.
c) Sale by trader to retailers for selling to the ultimate consumers.
Chapter 1 of Section I under heading “LIVE ANIMALS; ANIMAL PRODUCTS” of Customs Tariff Act, 1975 reads as under,
| Tariff Item | Description of goods |
| 0105 | Live poultry, that is to say, fowls of the species gallus domesticus, ducks, geese, turkeys and guinea fowls |
| 0105 94 00 | Fowls of the species Gallus domesticus |
Notification No. 2/2017-Central Tax (Rate) dated 28-06-2017 covers GST on live poultry which reads as under:
| Sl. No. | Chapter / Heading / Sub-heading / Tariff item | Description of Goods | Rate (%) |
| 5. | 0105 | Live poultry, that is to say, fowls of the species Gallus domesticus, ducks, geese, turkeys and guinea fowls. | Exempt |
*It is to be noted that Gallus Domesticus is the scientific name for poultry chicken.
Thus, sale of live poultry in any form and manner is fully exempt from GST.
1.03 Sale of Poultry Meat
Broiler Chicken is slaughtered, and its carcass is processed in its natural shape or is cut into pieces of various shapes and sizes. This carcass is either sold lose or sold by packing the same in unit containers.
A “unit container” means a package, whether large or small (for example, tin, can, box, jar, bottle, bag, or carton, drum, barrel, or canister) designed to hold a pre-determined quantity or number, which is indicated on such package. Such containers are heat resistant and contain all elements to keep the meat fresh and edible.
Poultry meat in fresh, chilled or frozen form is covered by Chapter 2 of Section I under heading “LIVE ANIMALS; ANIMAL PRODUCTS” of Customs Tariff Act, 1975:
| Tariff Item | Description of goods |
| 0207 | MEAT AND EDIBLE OFFAL, OF THE POULTRY OF HEADING 0105, FRESH, CHILLED OR FROZEN
– Of fowls of the species Gallus domesticus: |
| 0207 11 00 | Not cut in pieces, fresh or chilled |
| 0207 12 00 | Not cut in pieces, frozen |
| 0207 13 00 | Cuts and offal, fresh or chilled |
| 0207 14 00 | Cuts and offal, frozen |
EXEMPT
Notification No. 2/2017-Central Tax (Rate) dated 28-06-2017 covered the applicability of GST in poultry meat which reads as under:
| Sl. No. | Chapter / Heading / Sub-heading / Tariff item | Description of Goods | Rate (%) |
| 13. | 0207 | Meat and edible offal, of the poultry of heading 0105, fresh, chilled or frozen [other than frozen and put up in unit container] | Exempt |
However, Sl. No. 13 in above Notification was replaced by Notification No. 42/2017-Central Tax (Rate) dated 14-11-2017 as under:
| Sl. No. | Chapter / Heading / Sub-heading / Tariff item | Description of Goods | Rate (%) |
| 8. | 0203, 0204,
0205, 0206, 0207, 0208, 0209 |
All goods, fresh or chilled | Exempt |
| 9. | 0202, 0203, 0204, 0205, 0206, 0207, 0208, 0209, 0210 |
All goods [other than fresh or chilled] other than those put up in unit container and, –
(a) bearing a registered brand name; or (b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available [other than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily], subject to the conditions as in the ANNEXURE I ]”; |
Exempt |
TAXABLE
Further, Notification No.1/2017-Central Tax (Rate) dated 28-06-2017 read as under:
| Sl. No. | Chapter / Heading / Sub-heading / Tariff item | Description of Goods | Rate (%) |
| 7. | 0207 | Meat and edible offal, of the poultry of heading 0105, frozen and put up in unit containers | 12% |
The above entry no. 7 in Notification No.1/2017-Central Tax (Rate) dated 28-06-2017 was substituted by Notification No. 41/2017-Central Tax (Rate) dated 14-11-2017
| 1 | 0207 | All goods [other than fresh or chilled] and put up in unit container and,- (a) bearing a registered brand name; or (b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available [other than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily], subject to the conditions as in the ANNEXURE]” ; | 5% |
Thus, from the above, we can conclude the following:
| Sl. No. | Type of Meat | GST Applicability |
| 1 | Fresh meat (not chilled or frozen) | Exempt |
| 2 | Chilled meat (but not frozen) | Exempt |
| 3 | Frozen meat other than those put up in unit container and
(a) bearing a registered brand name; or (b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available [other than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily], subject to the conditions as in the ANNEXURE I] |
Exempt |
| 4 | Frozen meat and put up in unit container and
(a) bearing a registered brand name; or (b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available [other than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily], subject to the conditions as in the ANNEXURE]” |
5% |
| 5 | Frozen meat and put up in unit container but not
(a) bearing a registered brand name; or (b) bearing a brand name on which an actionable claim or enforceable right in a court of law is available [other than those where any actionable claim or enforceable right in respect of such brand name has been foregone voluntarily], subject to the conditions as in the ANNEXURE]” |
Exempt |
In the above table, two terms are used ‘chilled’ and ‘frozen’. Both the terms look similar, but the difference between the two is of temperature. While chilled implies a low temperature in a manner to preserve it for few days, frozen means freezing food products in a manner that they are preserved for a longer period.
1.04 Sale of Poultry Eggs
Poultry Eggs are covered by Chapter 4 of Section I under heading “Dairy produce; birds’ eggs; natural honey; edible products of animal origin, not elsewhere specified or included” of Customs Tariff Act, 1975 which reads as under:
| Tariff Item | Description of goods |
| 0407 | BIRDS’ EGGS, IN SHELL, FRESH, PRESERVED OR COOKED |
| 0407 11 00 |
|
| 0407 21 00 |
|
| 0408 | BIRDS’ EGGS, NOT IN SHELL, AND EGG YOLKS, FRESH, DRIED, COOKED BY STEAMING OR BY BOILING IN WATER, MOULDED, FROZEN OR OTHERWISE PRESERVED, WHETHER OR NOT CONTAINING ADDED SUGAR OR OTHER SWEETENING MATTER |
| 0408 11 00 |
|
| 0408 19 00 |
|
| 0408 91 00 |
|
| 0408 99 00 |
|
Notification No.2/2017-Central Tax (Rate) dated 28-06-2017 covers the applicability of GST on poultry eggs:
| Sl. No. | Chapter / Heading / Sub-heading / Tariff item | Description of Goods | Rate (%) |
| 28. | 0407 | Birds’ eggs, in shell, fresh, preserved or Cooked | Exempt |
Notification No.1/2017-Central Tax (Rate) dated 28-06-2017 covers the applicability of GST on poultry eggs not in shell:
| Sl. No. | Chapter / Heading / Sub-heading / Tariff item | Description of Goods | Rate (%) |
| 12. | 0408 | Birds’ eggs, not in shell, and egg yolks, fresh, dried, cooked by steaming or by boiling in water, moulded, frozen or otherwise preserved, whether or not containing added sugar or other sweetening matter. | 5% |
Thus, from the above, we may conclude as follows:
| Sl. No. | Type of Meat | GST Applicability |
| 1 | Layer eggs for broiler production | Exempt |
| 2 | Table eggs for human consumption – Fresh (With shell) | Exempt |
| 3 | Table eggs for human consumption – Cooked (With shell) | Exempt |
| 4 | Eggs without shell | 5% |
| 5 | Egg yolk whether fresh, dried, cooked by steaming or by boiling in water, moulded, frozen or otherwise preserved, whether or not containing added sugar or other sweetening matter | 5% |
1.05 Hatchery Services
A hatchery is the primary unit of the poultry industry which provides Day Old Bird Chicks by hatching the eggs. Hatcheries may be owned by poultry farms who after the hatching is done, place them in farms for further rearing. However, it is a common practice in the industry to send the hatching eggs to a hatchery owner who in turn incubates the eggs in the hatchery incubators and returns Day Old Bird Chicks. The hatchery owner is paid a specified rate per egg placed for hatching i.e. hatching charges.
Notification No. 12/2017- Central Tax (Rate) dated 28-06-2017 reads as follows:
| Sl. No. | Chapter, Section, Heading, Group or Service Code (Tariff) | Description of Services | Rate (%) | Condition |
| 54 | Heading 9986 | Services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce by way of-
(a) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing; (b) supply of farm labour; (c) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market; (d) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use; (e) loading, unloading, packing, storage or warehousing of agricultural produce; (f) agricultural extension services; (g) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce. |
Nil | Nil |
| 55 | Heading 9986 | 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, for food, fibre, fuel, raw material or other similar products or agricultural produce. | Nil | Nil |
Hatching Process
The unit is provided with eggs by the principal. The eggs are cleaned thoroughly to get rid of any foreign matters and checked for their suitability for hatching. Eggs having cracked shells and unfertile eggs are segregated and disposed off suitably. Thoroughly cleaned eggs are stored in rooms with sufficient cool air to bring down the temperature to normal. The conditioned eggs are transferred to setter incubators and incubated for 18 days. A temperature of 99.9ºF and relative humidity of 82% is maintained in the setter incubators. At the end of 18th day, eggs are transferred to holder incubators maintained at a temperature of 98.9ºF and relative humidity of 87% and incubated for 3 days. At the end of 21 days, chicks come out after breaking egg-shells. Egg shell and membranes are removed and each chick is checked for its sex and separated out. Each and every chick is vaccinated and packed in chick baskets and are handed over to the principal. The hatchery owner is paid with hatching charges on eggs set for hatching.
Agricultural Produce
Notification No. 12/2017- Central Tax (Rate) dated 28-06-2017 defines “Agricultural produce” to mean any produce out of cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products, on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market.
Thus, to qualify as an agricultural produce, a commodity must pass the following tests:
> It must be a produce out of rearing of all life forms of animals.
> On which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics.
> Processing done must make it marketable only for the primary market i.e. attaining the condition of its first marketability. Thus, once the primary marketability is attained, all other subsequent processes are secondary and thus does not qualify this test.
Studying the definition in the context of hatching process requires analysis of the entire process of rearing of Broiler Chicken as under:
a) Day Old Bird Chicks (DOBC):
DOBC is produced by rearing the hatching eggs for 18 days in incubators at controlled temperature. Thus, it is an indispensable part of the rearing process for obtaining the final agricultural produce i.e. Broiler Chicken.
b) Broiler Chicken i.e. grown up chicken for meat:
DOBC is again reared for a period of 35-40 days after which it develops into Broiler Chicken and becomes marketable or fit for selling. Further, it is capable of being sold as such without any further processing.
Thus Broiler Chicken is reared from the stage they are eggs till the time they become Broiler Chicken. Hence it is an agricultural produce since it is a produce out of rearing of all life forms of animals. The service of hatching layer eggs into day old bird chicks can be classified under Sl. No. 54 of Notification No. 12/2017- Central Tax (Rate) dated 28-06-2017 as under:
i) It is a service relating to rearing of all life forms of animals as hatchery services are agricultural operations directly related to production of any agricultural produce i.e. Broiler Chicken and
ii) It is a process carried out at an agricultural farm which does not alter the essential characteristics of agricultural produce but makes it only marketable for the primary market. It is just enabling a natural process to occur in an artificial manner.
1.06 Job Work
However, Sl. No. 55 reads as under:
“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, for food, fibre, fuel, raw material or other similar products or agricultural produce.”
Further, Section 2(68) of the CGST Act, 2017 defines job work as under:
“(68) “job work” means any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly;”
Thus, for any transaction to qualify as a job work, it has to possess all the following features;
a) It can be a treatment or process
b) Undertaken by a person i.e. a job worker may be unregistered person
c) On goods belonging to another registered person i.e. the principal must be registered under the Act.
In case of a hatchery unit:
a) Hatching may be termed to be a process to convert hatching eggs into DOBC by incubating the same under controlled temperature.
b) Job worker may be registered or unregistered.
c) Principal must be registered under the GST Law.
The primary service provided by a hatchery unit qualifies the criteria of a job work as given in the Act. Hatchery service qualifies to be an intermediate production process as job work in relation to rearing of all life forms of animals for food.
Thus, as regards taxability of hatchery services, we may conclude that hatchery services gets covered under both the Sl. Nos. 54 and 55 of Notification No. 12/2017- Central Tax (Rate) dated 28-06-2017 and hence exempt from the payment of GST.
1.07 Commission Payments
Commission on sale of Broiler Chicken is paid to selling agents. Such commission is exempt from payment of GST under the following entry:
“(g) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce.”
1.08 Loading/Unloading Charges, Packing & Storage Charges
Loading and unloading charges incurred directly in handling with agricultural produce is also exempt under the following entry:
“(e) loading, unloading, packing, storage or warehousing of agricultural produce;”
Carrying Charges
Transportation of poultry may be done by any of the following means:
a) By a goods transport agency.
b) By other than a goods transport agency.
Notification No. 12/2017- Central Tax (Rate) dated 28-06-2017 states as under:
| Sl. No. | Chapter, Section, Heading, Group or Service Code (Tariff) | Description of Services | Rate (%) | Condition |
| 18 | Heading 9965 | Services by way of transportation of goods- (a) by road except the services of- (i) a goods transportation agency; (ii) a courier agency; (b) by inland waterways. |
Nil | Nil |
| 20 | Heading 9965 | Services by way of transportation by rail or a vessel from one place in India to another of the following goods –
(e) agricultural produce; |
Nil | Nil |
| 21 | Heading 9965
or Heading 9967 |
Services provided by a goods transport agency, by way of transport in a goods carriage of –
(a) agricultural produce; |
Nil | Nil |
In terms of the entries contained in the above notification, agricultural produce transported by rail or a vessel or a goods transport agency has been specifically exempted by Notification No. 12/2017- Central Tax (Rate) dated 28-06-2017. In case of goods transported by road i.e. other than by a goods transport agency shall also be exempt from GST. Further, GST on agricultural produce shall not be payable on reverse charge basis on transport charges.
1.09 GST Implications on Poultry Feed
Poultry Feed gets covered by Chapter 23 of Section IV under heading “Residues and waste from the food industries; prepared animal fodder” of Customs Tariff Act, 1975:
| Tariff Item | Description of goods |
| 2309 | PREPARATIONS OF A KIND USED IN ANIMAL FEEDING |
| 2309 90 10 |
|
Notification No.2/2017-Central Tax (Rate) dated 28-06-2017 reads as follows:
| Sl. No. | Chapter / Heading / Sub-heading / Tariff item | Description of Goods | Rate (%) |
| 102. | 2302, 2304, 2305, 2306, 2308, 2309 | Aquatic feed including shrimp feed and prawn feed, poultry feed & cattle feed, including grass, hay & straw, supplement & husk of pulses, concentrates & additives, wheat bran & de-oiled cake | Exempt |
Thus, sale of Poultry Feed is fully exempt from GST under Tariff Item 2309.
Manufacture of Poultry Feed on Job Work Basis
It is a common practice in poultry industry to manufacture poultry feed on job work basis. Factory owners provide manufacturing facilities who are in turn provided with all raw materials by the principal to manufacture poultry feed. Production charges is paid on the basis of production of poultry feed per MT.
Section 2(68) of the CGST Act, 2017 reads as under:
“(68) “job work” means any treatment or process undertaken by a person on goods belonging to another registered person and the expression “job worker” shall be construed accordingly;”
Thus, for any transaction to qualify as a job work, it has to possess the following features;
a) It can be a treatment or process
b) By a person i.e. a job worker may be unregistered person
c) On goods belonging to another registered person i.e. the principal must be registered under the Act.
Presence of all the above conditions is mandatory for any activity to qualify as a job work. Job work charges received by a job worker is liable for GST.
Notification No. 31/2017-Central Tax (Rate) dated 13-10-2017 amended N/N 11/2017-Central Tax (Rate) dated 28-06-2019 and inserted point ‘g’ as given below:
| Sl. No. | Chapter, Section or Heading | Description of Service | Rate (%) | Condition |
| 26 | Heading 9988
(Manufacturing services on physical inputs (goods) owned by others) |
(i) Services by way of job work in relation to-
(g) all products falling under Chapter 23 in the First Schedule to the Customs Tariff Act, 1975 (51of 1975), except dog and cat food put up for retail sale falling under tariff item 23091000 of the said Chapter; |
2.50 | Nil |
Thus, job work charges received by a job worker for manufacture of poultry feed is liable for GST @ 5% in terms of the above entry. However, in case the principal is unregistered, it shall be taxed at the residuary head i.e. 18%.
1.10 Conclusion
From the above analysis, it may be concluded that the poultry industry is by and large exempted from the applicability of GST. However, there are certain areas where GST may get applicable and stakeholders need to take these into account before entering into any venture to avoid future disputes.
*****
Disclaimer:
The above expressed views are purely the personal views of the author. The possibility of other views on the subject matter cannot be ruled out. So, the readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc. before acting on the basis of the above write up. The author is not responsible in any manner.
Author Bio
Great Job sir. Nicely compiled information with comments. I m waiting for an updated article in view of latest amendment specially July, 2022.
Very Good article about poultry and poultry related job work.
However Please Clarify Poultry farm Like purchase live bird and sell the bird just keeping one day, Whether we need to take the Registration under GST
very useful for those who don’t have any knowledge about poultry sector. i request you please share internal audit guidelines related to poultry industry mainly Hatchery, integration, and feed mills. Because its very useful for those who desirous to start career internal auditors at Poultry industry.
Good Article. Outlines important facts and features of the trade and commerce aspect with regard to poultry. Any other information of like manner would be appreciated as it is well studied.