Looking for expert help with Income tax and GST for cattle feed and poultry feed manufacturers India? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Key Takeaways
- Cattle feed, poultry feed and aquatic feed, with supplements and additives, are GST-exempt from 22 September 2025, packed or loose (Notification 10/2025-CT(R), S. No. 105). Husk of pulses, chuni, churi, khanda, de-oiled rice bran and cotton seed oil cake are nil too.
- Many inputs are taxed: soyabean meal, groundnut cake, molasses and rice bran at 5%, woven polypropylene sacks at 18% (Notification 9/2025-CT(R)). Loose maize is nil; pre-packaged and labelled maize is 5%.
- The GST on those inputs can't be claimed back: no credit for exempt output (Section 17(2), CGST Act) and no inverted duty refund (Section 54(3)(ii)). Price it into your feed.
- A mill selling only exempt feed needs no GSTIN. Add soya meal trading or pet food and the feed sales count towards the Rs 20 lakh Telangana limit.
- For income tax, check the Section 44AD limit of Rs 2 crore or Rs 3 crore early. Once you cross it, you need books and, above Rs 1 crore, a tax audit unless the cash tests are met.
Is GST applicable on cattle feed? No. Cattle feed, poultry feed and aquatic feed, including grass, hay and straw, supplements and additives, wheat bran and de-oiled cake other than rice bran, are exempt under S. No. 105 of Notification 10/2025-Central Tax (Rate) from 22 September 2025. The entry has no "other than pre-packaged" condition, so branded bagged feed is nil as well.
A compound feed mill in Siddipet or Medak looks simple on paper. It buys maize, soya meal, de-oiled rice bran, molasses and mineral mixture, grinds and pellets them, and sells bags to dairy farmers, poultry integrators and dealers. Its sales carry no GST. The trouble sits on the purchase side, where several inputs and every bag carry tax the mill can never recover. This post covers which inputs are taxed, when the mill needs a GSTIN, what happens to the credit, and income tax for FY 2025-26 (AY 2026-27) under the Income-tax Act 1961, with the Income-tax Act 2025 sections that apply from 1 April 2026. It's for feed mill owners, partners in small pellet plants, and the CAs who file for them.
Cattle feed HSN code and GST rate, and which inputs are taxed
The nil entries are specific about what counts as feed. Ingredients bought in under their own headings often aren't covered.
Comparison
GST on Feed and Feed Inputs from 22 September 2025
| Item (HSN) | GST | Notification entry |
|---|---|---|
| Cattle, poultry and aquatic feed, incl. grass, hay, straw, supplement and additives, wheat bran, de-oiled cake other than rice bran (2301, 2302, 2308, 2309) | Nil | 10/2025-CT(R), S. No. 105 |
| De-oiled rice bran (2306) | Nil | 10/2025-CT(R), S. No. 106 |
| Cotton seed oil cake (2306) | Nil | 10/2025-CT(R), S. No. 107 |
| Husk of pulses incl. chilka; concentrates incl. chuni or churi; khanda (2302, 2309) | Nil | 10/2025-CT(R), S. No. 108 |
| Dicalcium phosphate of animal feed grade, IS 5470:2002 (2835) | Nil | 10/2025-CT(R), S. No. 112 |
| Salt (2501) | Nil | 10/2025-CT(R), S. No. 109 |
| Maize, other than pre-packaged and labelled (1005) | Nil | 10/2025-CT(R), S. No. 66 |
| Maize, pre-packaged and labelled (1005) | 5% | 9/2025-CT(R), Sch I, S. No. 47 |
| Molasses (1703) | 5% | 9/2025-CT(R), Sch I, S. No. 109 |
| Rice bran, other than de-oiled (2302) | 5% | 9/2025-CT(R), Sch I, S. No. 155 |
| Soyabean oil-cake / meal (2304) | 5% | 9/2025-CT(R), Sch I, S. No. 157 |
| Groundnut oil-cake (2305) | 5% | 9/2025-CT(R), Sch I, S. No. 158 |
| Other oil-cakes under 2306, except cotton seed cake and DORB | 5% | 9/2025-CT(R), Sch I, S. No. 159 |
| Woven polyethylene or polypropylene sacks for packing (3923 or 6305) | 18% | 9/2025-CT(R), Sch II, S. No. 200 |
| Dog and cat food (2309) | 18% | Not in S. No. 105; residual Sch II, S. No. 639 |
Source: CBIC Notifications 9/2025 and 10/2025-Central Tax (Rate), both in force 22 September 2025
Two things stand out. First, "de-oiled cake" in S. No. 105 is tied to headings 2301, 2302, 2308 and 2309. Soyabean meal (2304) and groundnut cake (2305) have their own 5% entries, so your soya meal bill will carry 5% even though the feed you make from it is nil. Second, the DCP entry is limited to animal feed grade DCP conforming to IS 5470:2002. Keep the supplier's test certificate or bill description on file.
Inside Telangana, 5% is billed as 2.5% CGST plus 2.5% SGST, and 18% as 9% plus 9%.
Does your feed mill need GST registration?
If every bag you sell is exempt feed, no. Section 23(1)(a) of the CGST Act says a person engaged exclusively in supplying goods wholly exempt from tax isn't liable to register, whatever the turnover.
That "exclusively" is where mills slip. Many also trade soya meal or molasses to dairies, sell a pet food line, or sell empty bags and scrap. Those are taxable. The moment you make one taxable sale, Section 2(6) counts your exempt feed sales in aggregate turnover too. For a supplier in Telangana the limit is Rs 20 lakh, because Notification 10/2019-Central Tax, which raised the goods limit to Rs 40 lakh, leaves out intra-State suppliers in Telangana.
Example: a mill in Medak sells Rs 1,80,00,000 of cattle feed and Rs 12,00,000 of soya meal to two dairy societies in FY 2026-27. Aggregate turnover is Rs 1,92,00,000. That's far above Rs 20 lakh, so the mill must register and charge 5% on the soya meal. Stop the soya meal trade and it wouldn't need a GSTIN at all.
Our GST registration limit guide lists the States on each limit. If you've crossed it, our GST registration service files the application.
Why the GST on your inputs is a cost you can't recover
Say a small mill makes cattle feed only and buys these in a year:
- Soya meal Rs 40,00,000 at 5%: GST Rs 2,00,000
- Molasses Rs 8,00,000 at 5%: GST Rs 40,000
- Printed polypropylene sacks Rs 6,00,000 at 18%: GST Rs 1,08,000
That's Rs 3,48,000 of GST paid. With no taxable output, none of it comes back. Section 17(2) of the CGST Act allows credit only for the part of inputs used for taxable supplies. A refund doesn't work either. The inverted duty refund in Section 54(3)(ii) applies where input tax is higher than output tax, "other than nil rated or fully exempt supplies". So the Rs 3,48,000 belongs in your cost per bag, and your price list should reflect it.
If you're registered because of a taxable trading line, the split works like this:
- Inputs used only for the taxable sale (soya meal bought and resold as it is): full credit.
- Inputs used only for feed (soya meal and molasses you grind into feed, feed bags): no credit.
- Common costs (godown rent, weighbridge, accounting fees): credit only for the taxable share, worked out under Rule 42 of the CGST Rules.
Keep separate stock records for soya meal you resell and soya meal you consume. Without them, the credit on the whole purchase is open to question. Our Rule 42 and 43 reversal guide shows the calculation, and our GST return filing service handles the monthly returns.
Income tax: 44AD, books and the audit limit
Feed is a low-margin, high-turnover business. That decides your income tax route more than anything else.
Section 44AD. For FY 2025-26, a resident individual, HUF or partnership firm (not an LLP) can declare 6% of turnover received by bank transfer, UPI or cheque (by the return due date) and 8% of the rest as profit, under Section 44AD of the Income-tax Act 1961. The limit is turnover of Rs 2 crore, or Rs 3 crore if cash receipts are within 5% of turnover. Your exempt feed sales count in that turnover; the GST exemption changes nothing for income tax. From 1 April 2026 the same scheme is Section 58 of the Income-tax Act 2025, with the same rates and limits.
Step-by-Step Guide
Working Out 44AD Profit for a Feed Mill (Proprietor, FY 2025-26)
Split turnover by mode
Rs 1,80,00,000 total: Rs 1,20,00,000 from integrators and dealers by bank, Rs 60,00,000 in cash from farmers at the gate.
Check the limit
Cash is 33% of turnover, above 5%, so the limit is Rs 2 crore. Rs 1.8 crore is within it.
Apply the rates
6% of Rs 1.2 crore is Rs 7,20,000; 8% of Rs 60 lakh is Rs 4,80,000. Deemed profit: Rs 12,00,000.
Compare with real margin
If your books show a 4% margin (Rs 7,20,000), 44AD makes you pay tax on Rs 4,80,000 you didn't earn. Declaring lower profit means books and a tax audit.
Source: Income-tax Act 1961, Sections 44AD and 44AB; Income-tax Act 2025, Sections 58 and 63
Move the Rs 60 lakh of gate sales to UPI and deemed profit falls by Rs 1,20,000, to Rs 10,80,000.
Books and audit. Once turnover passes the 44AD limit, or you declare actual profit, you keep full books. Section 44AB(a) then requires a tax audit if turnover exceeds Rs 1 crore. The limit rises to Rs 10 crore only if both cash receipts and cash payments are each within 5% of the total. From tax year 2026-27 the same rule is in Section 63 of the Income-tax Act 2025. Our tax audit thresholds guide has the detail.
Paying farmers in cash and TDS on big purchases
Cash for maize. Section 40A(3) disallows an expense where cash paid to one person in a day exceeds Rs 10,000. For FY 2025-26, Rule 6DD(e)(i) of the Income-tax Rules 1962 exempts payments for agricultural produce made to the cultivator, grower or producer. So cash paid to the farmer who grew the maize is safe; cash paid to a grain trader or commission agent isn't. Get the farmer's name, village and a signed receipt for each payment. From 1 April 2026 the Rs 10,000 limit is in Section 36(4) of the Income-tax Act 2025, and the farmer exception is Rule 26(1)(e)(i) of the Income-tax Rules 2026. Two cautions: the exception doesn't take farmer cash out of the 5% payment test for the Rs 10 crore audit limit, and paying by bank transfer avoids the question altogether. See our Section 40A(3) guide.
TDS on purchases (Section 194Q). If your turnover in the previous year exceeded Rs 10 crore, you're a "buyer" under Section 194Q of the 1961 Act. Buy more than Rs 50 lakh of goods from one seller in a year and you deduct 0.1% on the amount above Rs 50 lakh. A mill buying Rs 2,00,00,000 of soya meal from one plant deducts 0.1% of Rs 1,50,00,000, which is Rs 15,000. From 1 April 2026 this is Section 393(1) of the Income-tax Act 2025, Table Sl. No. 8(ii). The section covers "any goods", so exempt feed you sell to a large integrator can also suffer 194Q at their end; check that it shows in your Form 26AS. Our Section 194Q guide and TDS filing service cover returns and challans.
Common mistakes feed mills make
- Charging GST on cattle or poultry feed. It's nil, packed or loose. A 5% line on the bill collects tax that isn't due.
- Assuming soya meal is nil because "de-oiled cake" is. Soyabean meal (2304) and groundnut cake (2305) are 5%.
- Claiming credit on feed inputs. Credit on soya meal, molasses and bags used for exempt feed isn't allowed, and an inverted duty refund isn't either.
- Leaving feed sales out of aggregate turnover. Once you sell anything taxable, the exempt feed counts towards the Rs 20 lakh limit.
- Using 44AD after crossing Rs 2 crore. At Rs 2.2 crore with heavy cash sales, 44AD is gone and a tax audit is likely.
- Paying grain traders in cash. Rule 6DD(e) protects cash paid to the farmer, not to a middleman.
How Tax Garden helps feed manufacturers
We check whether your mill needs a GSTIN at all, given what you sell besides feed. If it does, we register it, set up your item master so feed, soya meal and pet food each carry the right HSN and rate, and work out the Rule 42 credit split every month. At year end we test 44AD against your real margin, keep your books audit-ready and file your ITR through our ITR filing service. Call or WhatsApp us on 9640290977.
Related reading: GST and income tax for poultry farms, your customers on the integrator side, income tax for dairy farms, and GST for oil mills, where your oil cake and rice bran come from.
