Ghee falls under HSN heading 0405, and its own eight-digit tariff line is 0405 90 20. As of October 2026, per Notification No. 9/2025-Integrated Tax (Rate) dated 17-9-2025, ghee is taxed at 5 per cent GST, in force from 22 September 2025; before that the rate was 12 per cent. This page shows where each figure comes from.
We make ghee; we are not tax advisers. Everything below is taken from government documents we opened, and the sources are listed at the end. For your own filing, check with a tax professional.
At a glance
- Ghee's HSN heading is 0405, its six-digit sub-heading 0405 90 and its eight-digit tariff line 0405 90 20 in DGFT's ITC(HS) schedule.
- GST on ghee is 5 per cent under Notification No. 9/2025-Integrated Tax (Rate), in force from 22 September 2025; before that it was 12 per cent.
- One GST entry covers the whole of heading 0405, so butter, dairy spreads, butter oil and ghee carry the same rate.
- On a tax invoice, Notification No. 78/2020 asks for four HSN digits up to ₹5 crore turnover and six above it, not the full eight.
- FSSAI separates butter oil and ghee by composition (0.4 against 0.5 per cent moisture) and by ghee's "especially developed flavour".
What is the HSN code for ghee?
Ghee belongs to heading 0405, "Butter and other fats and oils derived from milk; dairy spreads", in Chapter 4 (dairy produce). At eight digits, ghee has its own line, 0405 90 20, written 04059020 in the classification published by India's Directorate General of Foreign Trade (DGFT). The first four digits are the HSN heading.
The code works like a funnel. Chapter 4 covers dairy produce, eggs, honey and similar animal products. Heading 0405 narrows that to butter and other milk fats. Sub-heading 0405 90 ("Other") holds the milk fats that are neither butter nor dairy spreads, and the eight-digit lines below it name them: butter oil, ghee and a final "other".
The GST rate notifications borrow these numbers. Notification No. 9/2025-Integrated Tax (Rate) says that "tariff item", "sub-heading", "heading" and "Chapter" mean those of the First Schedule to the Customs Tariff Act, 1975, and that the Act's interpretation rules and Chapter Notes apply. We could not open CBIC's own Customs Tariff pages for checking (the server failed our certificate checks), so the eight-digit lines below are as DGFT lists them.
| Tariff line | Description (DGFT ITC(HS)) | GST rate | Source for the rate |
|---|---|---|---|
| 0405 10 00 | Butter | 5% | Notification 9/2025-Integrated Tax (Rate), Schedule I, entry 7 (heading 0405) |
| 0405 20 00 | Dairy spreads | 5% | Same entry |
| 0405 90 10 | Butter oil | 5% | Same entry |
| 0405 90 20 | Ghee | 5% | Same entry |
| 0405 90 90 | Other | 5% | Same entry |
One GST entry covers all five lines. Schedule I of the notification lists heading 0405 as a whole, described as "Butter and other fats and oils derived from milk, including ghee; dairy spreads", with no exceptions carved out of it.
What is the GST rate on ghee now?
As of October 2026, ghee is taxed at 5 per cent GST. Notification No. 9/2025-Integrated Tax (Rate), dated 17-9-2025, sets a rate of 5 per cent for goods in its Schedule I, and entry 7 of that schedule is heading 0405, which names ghee. The notification came into force on 22 September 2025.
The notification's own words on timing are that it "shall come into force with effect from the 22nd day of September, 2025". It was issued under the Integrated Goods and Services Tax Act, 2017, and it supersedes the 2017 rate notification, No. 01/2017-Integrated Tax (Rate). The copy we read is hosted on CBIC's site; it was prepared by the GST & Indirect Taxes Committee of the Institute of Chartered Accountants of India and is marked as corrected by a corrigendum dated 18-9-2025.
The GST Council's press release on its 56th meeting, held on 3 September 2025, says the same. Its annexure on the food sector lists heading 0405, "Butter and other fats (i.e. ghee, butter oil, etc.) from milk; dairy spreads", under the heading "12% to 5%". The release says the rate changes on all goods, apart from a list of tobacco and pan masala products, would apply from 22 September 2025.
Tax rates change. In the GST Council material we checked, we found no later change for heading 0405, but we cannot rule one out between our check and your reading. Look at the current notification, or ask a tax professional, before you rely on any rate for a return.
What was the GST rate on ghee before September 2025?
Before 22 September 2025, ghee was taxed at 12 per cent GST. The GST Council's press release on its 56th meeting lists heading 0405, which it describes as including ghee and butter oil, in a table headed "12% to 5%". That change applied to butter, dairy spreads and butter oil as well as ghee.
In plain arithmetic, on every ₹100 of taxable value the GST fell from ₹12 (12 per cent of 100) to ₹5 (5 per cent of 100), a cut of ₹7. What that meant for a shop price depended on each seller, and we have no figures on that, so we will not guess.
The same release moved several other dairy foods. It lists condensed milk and cheese alongside heading 0405 in the "12% to 5%" table, and it lists ultra-high temperature (UHT) milk and pre-packaged, labelled chena or paneer under "5% To Nil".
How do butter, ghee and butter oil differ in the tariff?
All three sit under heading 0405 and carry the same 5 per cent GST, but they have separate tariff lines because they are different products. Butter still holds water: up to 16 per cent by the tariff's own definition. Ghee and butter oil are almost pure milk fat, and the tariff places them under 0405 90, not under butter.
The Chapter 4 notes in DGFT's schedule draw the lines this way:
- Butter (0405 10 00): natural, whey or recombined butter made only from milk, with 80 to 95 per cent milk fat by weight, at most 2 per cent milk solids-not-fat and at most 16 per cent water. A sub-heading note adds that "butter" here "does not include dehydrated butter or ghee (sub-heading 0405 90)".
- Dairy spreads (0405 20 00): a spreadable water-in-oil emulsion in which milk fat is the only fat, with 39 per cent or more but less than 80 per cent milk fat.
- Butter oil (0405 90 10) and ghee (0405 90 20): separate lines under "Other". The tariff notes do not define either, so for the difference we turn to the food standard.
India's food regulator, FSSAI, puts butter oil and ghee in one standard for milk fat products. It describes both as fatty products made from milk "by means of processes which result in almost total removal of water and milk solids-not-fat". The difference it names is that "ghee has especially developed flavour and physical structure as a result of its method of manufacturing".
| FSSAI limit | Butter oil | Ghee |
|---|---|---|
| Moisture, maximum | 0.4% | 0.5% |
| Milk fat, minimum | 99.6% | 99.5% |
| Free fatty acids (as oleic acid), maximum | 0.4% | 2.0% |
In each column, the moisture maximum and the milk fat minimum add up to 100 per cent (0.4 + 99.6 and 0.5 + 99.5). For how ghee differs from clarified butter in the kitchen, see our piece on clarified butter and ghee. Grading marks are a separate matter from tax codes; our explainer on what the Agmark label on ghee means covers that.
How should the HSN code appear on a ghee invoice?
How many digits you must print depends on turnover. Under Notification No. 78/2020 – Central Tax, in force from 1 April 2021, a business with aggregate turnover up to five crore rupees in the previous financial year shows four digits, 0405 for ghee. Above five crore, it shows six digits: 0405 90.
| Aggregate turnover in the preceding financial year | HSN digits required | What that looks like for ghee |
|---|---|---|
| Up to ₹5 crore | 4 | 0405 |
| More than ₹5 crore | 6 | 0405 90 |
Three points from the notification are worth knowing:
- The table applies to tax invoices issued under the CGST Rules, 2017. It amended Notification No. 12/2017 – Central Tax.
- A business with turnover up to five crore rupees may leave the HSN code off tax invoices for supplies to unregistered persons.
- The notification asks for four or six digits. It does not ask for the full eight-digit line, 0405 90 20.
The six-digit code for ghee, 0405 90, is the "Other" sub-heading it shares with butter oil, so a six-digit code alone does not separate the two. Whether a particular invoice or return of yours is correct is a question for a tax professional, not for us.
The short version
Ghee's HSN heading is 0405, its six-digit sub-heading is 0405 90, and its eight-digit tariff line is 0405 90 20. As of October 2026, per Notification No. 9/2025-Integrated Tax (Rate) dated 17-9-2025, GST on ghee is 5 per cent, in force from 22 September 2025; it was 12 per cent before. Butter, dairy spreads, butter oil and ghee have separate lines but the same rate. On an invoice, four or six digits are required depending on turnover, under Notification No. 78/2020 – Central Tax. Check with a tax professional for your own filing.
Sources
Further reading behind the figures above. Himdhara's own numbers — yields, batch results — come from our production records and the batch reports on the lab reports page.
- Ministry of Finance, Department of Revenue (2025). Notification No. 9/2025-Integrated Tax (Rate) dated 17-9-2025 [Updated]. Copy hosted by CBIC; Schedule I entry 7 and Explanation read.
- Press Information Bureau, Ministry of Finance (2025). Recommendations of the 56th Meeting of the GST Council held at New Delhi, today. GST Council.
- Directorate General of Foreign Trade. ITC (HS) schedule, Chapter 4: Dairy Produce; Birds Eggs; Natural Honey; Edible Products Of Animal Origin. DGFT.
- Central Board of Indirect Taxes and Customs (2020). Notification No. 78/2020 – Central Tax. GST Council.
- Food Safety and Standards Authority of India. Chapter 2: Food Product Standards — 2.1 Dairy Products and Analogues (2.1.8 Standard for Milk Fat Products). FSSAI.