Looking for expert help with GST and income tax for firecracker shop owners 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
- Firecrackers (HSN 3604) are taxed at 18% GST: 9% CGST plus 9% SGST, from 22 September 2025 (Notification 9/2025-Central Tax (Rate), Schedule II, S. No. 80).
- A Diwali stall in a State where you have no fixed place of business makes you a casual taxable person. Registration is compulsory from the first rupee of sales (Sections 2(20) and 24(ii), CGST Act).
- Casual registration lasts up to 90 days, and you pay your estimated GST as an advance deposit before the registration is granted (Section 27).
- An existing shop can sell crackers under the composition scheme at 1% of turnover if last year's turnover was up to Rs 1.5 crore. A casual stall can't.
- Season sales of Diwali 2026 fall in tax year 2026-27 under the Income-tax Act 2025. Presumptive profit is 6% of digital receipts and 8% of cash (Section 58).
What is the GST rate on firecrackers in India? Firecrackers and other fireworks under HSN 3604 attract 18% GST, split as 9% CGST and 9% SGST on sales within a State. The rate comes from Schedule II, S. No. 80 of CBIC Notification 9/2025-Central Tax (Rate), which has applied since 22 September 2025. Sellers with no fixed shop in the State must register before selling.
Cracker sales are short and intense. Most of a year's turnover can land in three or four weeks before Diwali, often from a stall that didn't exist a month earlier. That timing is exactly why the GST rules catch people out: a temporary seller can't wait to cross a turnover limit, because the law asks for registration and tax in advance. This guide is for retail and wholesale fireworks sellers and their accountants. It covers GST under the CGST Act 2017 and income tax under both the Income-tax Act 1961 (FY 2025-26) and the Income-tax Act 2025 (tax year 2026-27, which includes this Diwali). Explosives licences under the Explosives Rules are a separate requirement and aren't covered here.
What GST do you charge on crackers?
18% on every box of sparklers, flower pots, rockets and bombs. Notification 9/2025-Central Tax (Rate) lists "Fireworks, signalling flares, rain rockets, fog signals and other pyrotechnic articles" (heading 3604) at S. No. 80 of Schedule II, which carries 9% CGST. The State levies the matching 9% SGST, so a Rs 1,000 box (before tax) is billed at Rs 1,180 within your State. If your supplier is in another State, it charges IGST instead of CGST and SGST.
Many cracker sellers also stock diyas, candles and agarbatti in the same season. Those items sit in different entries, so don't bill the whole counter at one rate.
Comparison
GST on Items a Diwali Cracker Stall Commonly Sells (from 22 September 2025)
| Item (HSN) | GST | Source |
|---|---|---|
| Fireworks, sparklers, rockets and other pyrotechnic articles (3604) | 18% | 9/2025-CT(R), Schedule II, S. No. 80 |
| Candles, tapers and the like (3406) | 5% | 9/2025-CT(R), Schedule I, S. No. 253 |
| Agarbatti, dhoop batti, dhoop, sambraani (3307 41 00) | 5% | 9/2025-CT(R), Schedule I, S. No. 250 |
| Earthen pots and clay lamps (diyas) (6912 00 40) | Nil | 10/2025-CT(R), S. No. 151 |
Source: CBIC Notifications 9/2025-Central Tax (Rate) and 10/2025-Central Tax (Rate), both dated 17 September 2025, in force from 22 September 2025. Rates shown are CGST + SGST combined.
Do you need GST registration for a Diwali stall?
It depends on one question: do you have a fixed place of business in that State?
No fixed place of business: register before you sell. Section 2(20) of the CGST Act defines a casual taxable person as someone who "occasionally undertakes transactions involving supply of goods" in a State or Union territory "where he has no fixed place of business". Section 24(ii) then makes registration compulsory for casual taxable persons making taxable supplies, "notwithstanding" the turnover limit in Section 22(1). The Rs 40 lakh goods exemption in Notification 10/2019-Central Tax excludes everyone covered by Section 24, so it doesn't help.
Three rules make casual registration different from a normal one (Section 27, CGST Act):
- It's short. The certificate is valid for the period in your application or 90 days from the effective date, whichever is earlier. The officer can extend it by up to 90 more days if you show sufficient cause.
- You pay first. With the application, you deposit an amount equal to your estimated tax liability for that period. An extension needs a further deposit for the extra period.
- No sales before the certificate. Section 27(1) says you "shall make taxable supplies only after the issuance of the certificate of registration".
Rule 8(6) of the CGST Rules adds the mechanics: the portal issues a temporary reference number for the deposit, and your application acknowledgement comes only after you pay.
Example: you plan a 30-day stall and expect sales of Rs 5,00,000 before GST. Tax at 18% is Rs 90,000 (Rs 45,000 CGST and Rs 45,000 SGST). That Rs 90,000 is the advance deposit you budget for. It goes into your electronic cash ledger and is used to pay the tax you report for the period (Section 27(3), read with Section 49). Estimate honestly, and file early enough for the certificate to arrive before your first sale.
You already run a shop in that State: the normal limits apply. You aren't a casual taxable person there, because you have a fixed place of business. Registration is required once aggregate turnover crosses Rs 40 lakh for goods-only sellers in most States (Notification 10/2019-Central Tax). Telangana is one of the States the notification leaves out, so the Section 22(1) limit of Rs 20 lakh applies there. If you're registered and open a separate seasonal outlet, update your registration to include it as an additional place of business. Our GST registration threshold guide has the State-wise list.
Step-by-Step Guide
Casual GST Registration for a Diwali Cracker Stall
Fix the stall dates
Choose the period you will trade. The registration can cover at most 90 days from its effective date.
Estimate your tax
Projected sales before GST x 18% for crackers (5% for candles or agarbatti). This is your advance deposit.
Apply on the GST portal
Apply for registration as a casual taxable person. The portal issues a temporary reference number for the deposit.
Pay the deposit
Pay the estimated tax. The acknowledgement is issued only after the deposit, and it is credited to your electronic cash ledger.
Start selling after the certificate
Bill at 18% on fireworks from the day the certificate is issued, never before. Apply for an extension with a further deposit if you need longer.
Source: CGST Act 2017, Sections 2(20), 24(ii), 27; Rule 8(6), CGST Rules 2017
Composition or regular GST for a cracker shop?
Composition is only for sellers with a fixed shop. Section 10(2)(f) bars casual taxable persons from it.
If you run a general store, gift shop or stationery shop that adds crackers for the season, composition can still work. Your aggregate turnover in the previous year must be up to Rs 1.5 crore (Notification 14/2019-Central Tax), and you can't make any inter-State sales (Section 10(2)(c)). Buying stock from a supplier in another State is fine; selling across the border isn't. Traders pay 0.5% CGST plus 0.5% SGST, so 1% of taxable turnover (Rule 7, Table S. No. 3).
The trade-off is in Section 10(4): you can't collect GST from customers and can't claim input tax credit.
Example: a composition stationery shop in Hyderabad buys crackers worth Rs 4,00,000 plus 18% GST of Rs 72,000 from a registered wholesaler, and sells them for Rs 6,00,000.
- Composition tax: 1% x Rs 6,00,000 = Rs 6,000, paid from your margin.
- The Rs 72,000 GST on purchases is a cost, because composition dealers get no input tax credit.
- A regular dealer selling at the same Rs 6,00,000 before tax would add Rs 1,08,000 GST to the customer's bill, claim the Rs 72,000 credit, and pay Rs 36,000 in cash. The GST is collected from customers, not taken from the margin.
So composition suits a shop that sells mostly to households who compare final prices. A shop that sells to registered businesses, or that wants to claim credit on large cracker purchases, usually does better under the regular scheme. Run your own figures, and see our composition scheme guide for the full conditions.
E-way bills on cracker stock
Stock arriving from a manufacturer in another State usually crosses the Rs 50,000 line. Rule 138(1) of the CGST Rules requires an e-way bill before any registered person moves goods with a consignment value above Rs 50,000. That covers a supply, movement for other reasons, and inward supply from an unregistered person. Your supplier normally generates it. Check that one travels with every truck, and keep a copy with the purchase invoice. Our e-way bill guide walks through the portal.
How cracker income is taxed
Diwali 2026 falls in tax year 2026-27 (1 April 2026 to 31 March 2027), so the Income-tax Act 2025 applies. Last year's season, in FY 2025-26, is under the 1961 Act. The rupee limits are the same in both.
Comparison
Income Tax Rules for a Cracker Business: FY 2025-26 vs Tax Year 2026-27
| Rule | FY 2025-26 (Income-tax Act 1961) | Tax year 2026-27 (Income-tax Act 2025) |
|---|---|---|
| Presumptive profit | Section 44AD: 6% of bank/UPI receipts, 8% of cash | Section 58(2), Table S. No. 1: same rates |
| Turnover limit for presumptive scheme | Rs 2 crore; Rs 3 crore if cash receipts within 5% | Same |
| Opting out after using it | Section 44AD(4): barred for 5 years; books and audit under 44AD(5) | Section 58(7) and (8): same |
| Cash receipt limit | Section 269ST: below Rs 2 lakh per person per day, per transaction or per event | Section 186: same |
| Penalty for cash receipt above limit | Section 271DA: equal to the amount received | Section 451: same |
| Cash expense disallowed | Section 40A(3): above Rs 10,000 to one person in a day | Section 36(4): same |
Source: Income-tax Act 1961 as amended; Income-tax Act 2025 as amended by Finance Act 2026
Presumptive profit works well for a seasonal trade. Cracker margins swing with stock left over after Diwali, and many stalls keep no detailed books. Section 44AD (and Section 58 from this year) lets a resident individual, HUF or firm, other than an LLP, declare a fixed share of turnover as profit instead.
Example: a proprietor's only business is cracker trading. Turnover in tax year 2026-27 is Rs 40,00,000: Rs 28,00,000 by UPI and bank, Rs 12,00,000 in cash.
- Digital receipts: 6% x Rs 28,00,000 = Rs 1,68,000
- Cash receipts: 8% x Rs 12,00,000 = Rs 96,000
- Presumptive profit: Rs 2,64,000
With no other income, that's within the nil slab of Rs 4,00,000 under the new regime in Section 202(1) of the 2025 Act, so no tax is payable. Cash is 30% of turnover here, above 5%, so the Rs 2 crore limit applies, not Rs 3 crore. The return is due by 31 August 2027 for a non-audit business (Section 263(1)(c), Table S. No. 3). Our Section 44AD guide explains the lock-in rule.
Watch bulk cash sales. Companies and housing societies buy crackers in bulk for Diwali events. If one buyer pays you Rs 2,00,000 or more in cash in a day, for a single transaction, or for one event, you breach Section 186 of the 2025 Act (Section 269ST for FY 2025-26). The penalty under Section 451 equals the amount received. Take bulk orders by UPI, bank transfer or account payee cheque.
Common mistakes cracker sellers make
- Selling before the casual certificate arrives. Section 27(1) allows supplies only after issue, so apply well before your stall opens.
- Assuming the Rs 40 lakh limit covers a temporary stall. It doesn't cover a casual taxable person, whose registration is compulsory under Section 24(ii).
- Billing candles and diyas at 18%. Candles and agarbatti are 5%, and earthen clay lamps are exempt. Bill each item under its own entry.
- Opting for composition at a stall. Casual taxable persons can't use it, and a composition shop can't sell to a buyer in another State.
- Taking a Rs 2 lakh cash order from a corporate buyer. The penalty equals the whole amount received.
How Tax Garden helps cracker sellers
We file your casual GST registration with a realistic deposit estimate, or check whether your existing shop's turnover and sales pattern still suit composition. Our GST registration service handles the application, and our GST return filing service files the season's returns. After the year closes, our ITR filing service works out whether presumptive tax or books suit your actual margin.
