Income Tax and GST for Coffee Planters, Curing Works and Roasters (AY 2026-27)

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Key Takeaways

• Roasted coffee (HSN 0901), ground or whole, decaffeinated or not, is 5% GST (Notification 9/2025-CT(R), Schedule I, S. No. 33) from 22 September 2025.
• Unroasted coffee beans are exempt (Notification 10/2025-CT(R), S. No. 57). A planter or trader selling only green coffee needn't register.
• Instant coffee (2101 11, 2101 12 00) and roasted chicory (2101 30) are 5% too.
• Curing charges to a registered planter or trader are job work at 5%.
• Planters pay income tax on only 25% of income from coffee they grew and cured, or 40% if they also roast and grind it (Rule 7B, 1962 Rules; Rule 271, Rules 2026).

What is the GST rate and HSN code for coffee? Coffee falls under HSN 0901. Roasted coffee, whole or ground, is 5% GST (2.5% CGST plus 2.5% SGST) under Schedule I, S. No. 33 of Notification 9/2025-Central Tax (Rate), in force from 22 September 2025. Coffee beans that are not roasted are exempt under Notification 10/2025-CT(R), S. No. 57. Instant coffee is also 5%.

Coffee moves through three hands before it reaches a cup, and each one has a different tax position. The planter grows cherry and often sells parchment or cherry coffee to a curing works or trader. The curing works hulls, grades and bags it, sometimes buying outright and sometimes charging the owner a fee per bag. The roaster buys green coffee, roasts and grinds it, and sells packed filter coffee or beans. This post covers GST rates, registration, curing charges, composition, and income tax for FY 2025-26 (AY 2026-27) under the Income-tax Act 1961, with the Income-tax Act 2025 and Rules 2026 provisions that apply from 1 April 2026. It's written for planters, curing works, green coffee traders, roasters and the CAs who file for them in Karnataka, Kerala, Tamil Nadu and beyond. If you trade tea or spices as well, see our tea traders and estates guide and spice and masala traders guide.

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What GST rate applies to coffee and the things you buy?

The split that matters is roasted versus not roasted. Notifications 9/2025 and 10/2025-Central Tax (Rate), both in force from 22 September 2025, set the rates below.

Tax Rate Chart

GST on Coffee and Common Coffee-Business Inputs (from 22 September 2025)

Coffee beans, not roasted: green coffee, parchment, cherry (0901)

Notification 10/2025-CT(R), S. No. 57

Nil

Roasted coffee, whole or ground, decaffeinated or not; coffee husks and skins (0901)

Schedule I, S. No. 33

5%

Instant coffee, coffee extracts and preparations with a coffee base (2101 11, 2101 12 00)

Schedule I, S. No. 135

5%

Roasted chicory and other roasted coffee substitutes (2101 30)

Schedule I, S. No. 137

5%

Curing or processing coffee as job work for a registered owner (9988)

Notification 11/2017-CT(R), S. No. 26(ii)(a)

5%

Paper or paperboard cartons and boxes (4819 10, 4819 20)

Schedule I, S. No. 322

5%

Plastic pouches, valve bags and other plastic packing articles (3923)

Schedule II, S. No. 124

18%

Source: CBIC Notifications 9/2025-CT(R) and 10/2025-CT(R), 17 September 2025, in force 22 September 2025; Notification 11/2017-CT(R) as amended by 15/2025-CT(R)

Roasting is the line. The 5% entry reads "Coffee roasted, whether or not decaffeinated; coffee husks and skins; coffee substitutes containing coffee in any proportion [other than coffee beans not roasted]". So parchment, cherry, clean green coffee and graded beans are all exempt as long as they haven't been roasted. The moment a bag is roasted, it's 5%, whether you sell it whole or ground, loose or in a branded pack.

Husks are taxable. Coffee husks and skins are named in the 5% entry. A curing works that sells husk as fuel or manure should bill it at 5%, even though the green coffee it came from was exempt.

Filter coffee blends. Roasted chicory is 5% under 2101 30, and roasted coffee is 5% under 0901. A coffee-chicory blend is 5% either way. Instant coffee and premixes with a coffee base are 5% under S. No. 135.

Cafés aren't covered here. Serving a cup of coffee is a restaurant service, not a sale of goods of heading 0901. Our restaurant GST guide covers that.

Who needs GST registration in the coffee trade?

Planters and green coffee traders. If everything you sell is unroasted coffee, every supply is exempt. Section 23(1)(a) of the CGST Act says a person supplying only exempt goods isn't liable to register. Section 23(1)(b) separately covers an agriculturist selling produce out of cultivation of land. That changes the moment you sell even small amounts of husk or roasted coffee.

Count exempt sales in your turnover. Aggregate turnover includes exempt supplies. A trader who sells Rs 35 lakh of green coffee and Rs 8 lakh of roasted coffee has Rs 43 lakh of aggregate turnover and crosses the Rs 40 lakh goods limit, even though only Rs 8 lakh is taxable.

Roasters. The Rs 40 lakh limit for businesses that supply only goods comes from Notification 10/2019-Central Tax. It doesn't apply to intra-State suppliers in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand, where Section 22(1) limits apply instead. Karnataka, Kerala and Tamil Nadu aren't on that list. A roaster in Hyderabad, for instance, registers above Rs 20 lakh. Our registration limit guide has the detail.

Curing works. If you charge a fee for curing, you supply a service, not goods, so the Rs 40 lakh goods-only limit doesn't help. The Section 22(1) limit of Rs 20 lakh applies. If you sell coffee to buyers in other States, Section 24 requires registration from the first inter-State sale. Our GST registration service files the application.

Composition. Coffee isn't on the barred list in Notification 14/2019-Central Tax (which names ice cream, pan masala and tobacco). A roaster whose last-year turnover was up to Rs 1.5 crore (Rs 75 lakh in the eight States the notification names) can pay 0.5% CGST plus 0.5% SGST on turnover under Rule 7 of the CGST Rules. But Section 10(2)(c) bars any inter-State sale. A roaster shipping packs to customers in other States, whether directly or through a website, can't use it. Our composition scheme guide explains the other conditions.

Curing works: job work charges and outright purchases

Many curing works run two businesses side by side. They buy parchment or cherry, cure it and sell the green coffee as their own. They also cure coffee that still belongs to a planter or trader and charge a fee.

Coffee you buy and sell. Green coffee is exempt, so you charge no GST on it and get no input credit on costs used to make it (Section 17(2) of the CGST Act). Husk you sell is 5%.

Curing charges for a registered owner. Section 2(68) of the CGST Act defines job work as treatment or process on goods belonging to another registered person. Notification 11/2017-Central Tax (Rate), S. No. 26(ii)(a), as substituted by Notification 15/2025-CT(R), sets 2.5% CGST plus 2.5% SGST on job work in relation to food and food products of Chapters 1 to 22. Coffee is Chapter 9.

Example: a curing works hulls and grades 600 bags for a registered coffee trader at Rs 500 a bag. Curing charges are Rs 3,00,000. GST at 5% is Rs 15,000 (Rs 7,500 CGST plus Rs 7,500 SGST), and the invoice total is Rs 3,15,000. The trader can claim the Rs 15,000 as credit if it uses the coffee in taxable supplies such as roasted coffee.

Curing for an unregistered grower. Section 2(68) needs the owner to be registered, so curing for a small unregistered grower isn't "job work" under that definition. Notification 12/2017-CT(R), S. No. 54(c) exempts curing, drying, sorting and grading, but only when carried out at an agricultural farm. CBIC Circular 16/16/2017-GST adds that processed coffee beans or powder fall outside the definition of agricultural produce, so the S. No. 54 exemption for packing and storage doesn't cover them either. An off-farm curing works shouldn't assume its charges to an unregistered grower are exempt. Agree the rate with your CA before you bill, and keep a record of each owner's GSTIN so you know which customers are registered.

Step-by-Step Guide

Setting Up GST for a Coffee Curing or Roasting Business

1

Map your HSN codes

Unroasted coffee 0901 exempt; roasted coffee, ground coffee and husk 0901 at 5%; instant coffee 2101 11 at 5%; roasted chicory 2101 30 at 5%.

2

Check registration

Count exempt green coffee in aggregate turnover. Register above Rs 40 lakh for goods only, Rs 20 lakh if you also charge curing fees, or from your first inter-State sale.

3

Bill curing charges correctly

Collect the owner's GSTIN. Job work for a registered owner is 5% under S. No. 26(ii)(a). Settle the position for unregistered growers with your CA.

4

Split credit between exempt and taxable sales

Credit on costs used for exempt green coffee isn't allowed. Reverse the common credit share under Rule 42 of the CGST Rules each month.

5

Generate e-way bills for roasted coffee

Any consignment of taxable goods above Rs 50,000 needs an e-way bill under Rule 138(1).

Source: Notifications 9/2025-CT(R), 10/2025-CT(R), 11/2017-CT(R) as amended by 15/2025-CT(R), 12/2017-CT(R), 10/2019-CT and 14/2019-CT; CGST Act Sections 2(68), 10, 17, 22, 23 and 24; CGST Rules 7, 42 and 138

Roasters: why you'll usually pay GST in cash

Tea packers often build up excess credit. Coffee roasters usually don't, and the reason is the bean. Green coffee is exempt, so your biggest purchase carries no GST and gives no credit. Your credit comes mostly from pouches, cartons, roasting machinery and services.

Example: a roaster in a month buys green coffee worth Rs 8,00,000 (exempt, no GST), valve pouches worth Rs 1,00,000 (GST at 18%, Rs 18,000) and cartons worth Rs 40,000 (GST at 5%, Rs 2,000). It sells roasted and ground coffee worth Rs 14,00,000.

So budget for cash GST every month. If a launch month with heavy pouch stock does leave excess credit, coffee isn't on the list in Notification 5/2017-Central Tax (Rate) of goods barred from inverted duty refunds, so a refund under Section 54(3)(ii) is open to you. Our inverted duty refund guide walks through the Rule 89(5) formula.

If you sell both green and roasted coffee, credit on common costs such as electricity, rent and accounting must be split. Rule 42 of the CGST Rules makes you reverse the share that relates to exempt green coffee sales.

Income tax for coffee planters: the 25% and 40% rules

If you grow coffee and cure it yourself, part of your income is agricultural and part is business. The Rules fix the split.

The rule. Income from the sale of coffee grown and cured by the seller in India is computed as if it were business income, and 25% of it is taxable. If the seller also roasts and grinds it, with or without chicory or flavouring, 40% is taxable. For FY 2025-26 this is Rule 7B(1) and 7B(1A) of the Income-tax Rules 1962. From 1 April 2026 it's Rule 271(1), Table Sl. Nos. 2 and 3 of the Income-tax Rules 2026, at the same 25% and 40%. Both rules take "curing" from Section 3(d) of the Coffee Act 1942.

Example: an individual planter's FY 2025-26 profit from coffee grown and cured on the estate, computed as business income, is Rs 20,00,000.

Agricultural income isn't taxed directly, but for an individual or HUF it can push the taxable part into a higher slab under the partial integration rules. Our agricultural income guide shows that calculation.

Bought coffee isn't covered. The rule applies only to coffee the seller grew. A planter who also buys parchment from neighbours and cures it alongside their own crop earns ordinary business income on the bought share, taxed in full. Rule 7B and Rule 271 give no allocation method, so keep separate records of own-crop and bought lots and agree the basis with your CA. Estates that grow rubber alongside coffee face the same issue under the 35% rubber rule, covered in our rubber growers, dealers and processors guide.

Replanting. You can deduct the cost of planting coffee plants to replace plants that have died or become permanently useless in an area already planted, if the area hasn't been abandoned (Rule 7B(2); Rule 271(2)). A Coffee Board replanting subsidy that's exempt from tax isn't deducted from that cost. The subsidy exemption is Section 10(31) of the 1961 Act and Schedule III, Table Sl. No. 21 of the 2025 Act.

Coffee development account. A business that grows and manufactures coffee in India can deduct money deposited in a NABARD special account under a Coffee Board scheme, or in a Coffee Board deposit account. The deduction is the amount deposited or 40% of the business profit before this deduction, whichever is less. The deposit must be made within six months of the year end, or by the return due date if that's earlier, and the accounts must be audited. It's Section 33AB of the 1961 Act for FY 2025-26 and Section 48 with Schedule IX of the 2025 Act from 1 April 2026. Money withdrawn and not used for the scheme's purposes becomes taxable in the year of withdrawal.

Income tax for curing works, traders and roasters

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 account payee 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 Rs 2 crore of turnover, or Rs 3 crore if cash receipts are within 5% of turnover. From 1 April 2026 the same scheme is Section 58(2), Table Sl. No. 1, of the Income-tax Act 2025.

Example: a proprietor's roastery has FY 2025-26 turnover of Rs 1,20,00,000: Rs 1,12,00,000 by bank and UPI and Rs 8,00,000 in cash. Cash is 6.67% of turnover, above 5%, so the limit is Rs 2 crore, and the roastery is within it. Deemed profit is 6% of Rs 1,12,00,000 (Rs 6,72,000) plus 8% of Rs 8,00,000 (Rs 64,000), so Rs 7,36,000. Green coffee trading margins can be thinner than that, so compare with your books before you opt in. Our Section 44AD guide explains the five-year lock-in if you opt out.

Paying growers in cash. A business expense paid in cash above Rs 10,000 to one person in a day is normally disallowed (Section 40A(3) of the 1961 Act; Section 36(4) of the 2025 Act). Payment for agricultural produce made to the cultivator, grower or producer is an exception: Rule 6DD(e) of the 1962 Rules for FY 2025-26 and Rule 26(1)(e) of the Rules 2026 from 1 April 2026. A curing works paying a small grower Rs 45,000 in cash for parchment is covered. The same payment to a commission agent isn't, and the whole Rs 45,000 would be disallowed. Keep the grower's name, estate or village and a signed receipt for every cash purchase.

Cash you receive. Under Section 269ST of the 1961 Act (Section 186 of the 2025 Act), no one can receive Rs 2,00,000 or more in cash from one person in a day, for one transaction, or for one event. That limit binds the grower too: a trader paying Rs 2,50,000 in cash for one lot puts the grower in breach. The penalty equals the amount received (Section 271DA of the 1961 Act; Section 451 of the 2025 Act). Our cash transaction limits guide covers both sides.

Common mistakes in the coffee trade

1. Billing husk as exempt. Coffee husks and skins are in the 5% entry, not the exempt one.
2. Leaving green coffee out of turnover. Exempt sales count towards the registration limit.
3. Charging curing fees without checking the owner's GSTIN. The 5% job work rate depends on the owner being registered.
4. Applying the 25% rule to bought coffee. Rule 7B and Rule 271 cover only coffee you grew.
5. Paying commission agents in cash. The cash exception covers the grower, not a middleman.
6. Opting for composition while shipping to other States. Section 10(2)(c) rules it out.

How Tax Garden helps coffee businesses

We map your HSN codes, bill curing charges at the right rate, reverse credit on exempt green coffee sales each month and file GSTR-1 and GSTR-3B through our GST return filing service. For planters, we keep own-crop and bought lots apart, work out the 25% or 40% split and the coffee development deduction, and file your ITR through our ITR filing service. Our accounting and bookkeeping service keeps grower payments and cash limits in order through the year. Call or WhatsApp us on 9640290977.

Related reading: GST and income tax for cold storage owners, GST on job work, GST and income tax for FMCG distributors and the item-wise GST rates list.