Looking for expert help with GST and income tax for goat and sheep farm 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
- Live sheep and goats, fresh mutton, raw wool, fresh goat milk, fodder and loose manure are all GST-free from 22 September 2025 (Notification 10/2025-Central Tax (Rate), S. No. 4, 8, 141, 15, 90 and 116).
- A farm selling only exempt items doesn't need GST registration, whatever its turnover (Section 23(1)(a), CGST Act). Labelled packs of frozen mutton or bagged manure are 5%, and they bring the turnover limit into play.
- Goat and sheep rearing income is not agricultural income under Section 2(1A) of the Income-tax Act 1961. It's business income, even when the shed stands on your own farmland.
- Section 44AD lets you declare 6% (bank receipts) or 8% (cash) of turnover as profit without keeping books, if turnover is within Rs 2 crore.
- Never take Rs 2 lakh or more in cash from one buyer in a day (Section 269ST). The penalty equals the amount received, and Bakrid bulk sales are where this usually goes wrong.
Is goat farming income taxable in India? Yes. Under Section 2(1A) of the Income-tax Act 1961, agricultural income comes from land used for agriculture, and rearing goats or sheep is not cultivation of land. A goat or sheep farmer pays income tax on farm profit as business income, and can use Section 44AD (6% or 8% deemed profit) if turnover is within Rs 2 crore.
Goat and sheep rearing has grown from a side income for village families into a proper business. Stall-fed farms in Telangana and Andhra Pradesh now carry 200 to 1,000 animals and sell Rs 50 lakh or more in a year, much of it in the weeks before Bakrid. Two beliefs travel with that growth: "there's no GST on goats" and "farm income is tax-free". The first is right for almost everything a farm sells. The second is wrong, and it's why many farmers with real profits have never filed a return. This guide covers both taxes for FY 2025-26 (AY 2026-27) under the Income-tax Act 1961, with the GST rates in force since 22 September 2025.
GST rate and HSN code for goat and sheep farm products
Almost everything a goat or sheep farm sells is exempt. GST shows up on processed products in labelled retail packs, on skins, and on most of what you buy apart from feed.
Comparison
GST on Goat and Sheep Farm Products and Inputs (from 22 September 2025)
| Item | GST | Entry |
|---|---|---|
| Live sheep and goats: breeding stock, kids, lambs, animals for slaughter (0104) | Nil | Notif 10/2025-CT(R), S. No. 4 |
| Mutton and goat meat, offal, fresh or chilled (0204, 0206) | Nil | Notif 10/2025-CT(R), S. No. 8 |
| Frozen mutton, not pre-packaged and labelled | Nil | Notif 10/2025-CT(R), S. No. 9 |
| Fresh goat milk (0401) | Nil | Notif 10/2025-CT(R), S. No. 15 |
| Raw wool, not carded or combed (5101); raw animal hair (5102) | Nil | Notif 10/2025-CT(R), S. No. 141, 142 |
| Hay, lucerne, fodder and similar forage (1214); straw (1213) | Nil | Notif 10/2025-CT(R), S. No. 90, 89 |
| Cattle feed including grass, hay and straw, supplements, de-oiled cake (2301, 2302, 2308, 2309) | Nil | Notif 10/2025-CT(R), S. No. 105 |
| Goat and sheep manure, not pre-packaged and labelled (3101) | Nil | Notif 10/2025-CT(R), S. No. 116 |
| Semen, including frozen semen (0511) | Nil | Notif 10/2025-CT(R), S. No. 25 |
| Frozen mutton, pre-packaged and labelled | 5% | Notif 9/2025-CT(R), Sch I, S. No. 2 |
| Raw skins of sheep or lambs (4102); raw goat skins (4103) | 5% | Notif 9/2025-CT(R), Sch I, S. No. 279, 280 |
| Wool, carded or combed (5105) | 5% | Notif 9/2025-CT(R), Sch I, S. No. 328 |
| Organic fertiliser (manure), pre-packaged and labelled (3101) | 5% | Notif 9/2025-CT(R), Sch I, S. No. 237 |
| Veterinary medicines put up for retail sale (3004); vaccines (3002) | 5% | Notif 9/2025-CT(R), Sch I, S. No. 234, 232 |
| Agricultural machinery of heading 8436, parts | 5% | Notif 9/2025-CT(R), Sch I, S. No. 434 |
Source: Notification 10/2025-Central Tax (Rate) (exemptions) and Notification 9/2025-Central Tax (Rate), Schedule I (2.5% CGST + 2.5% SGST), both dated 17 Sep 2025, in force 22 Sep 2025, read with amendments up to Notifications 02/2026 and 03/2026-Central Tax (Rate) of 28 Oct 2026
Two points follow. A farm selling animals, mutton and raw wool charges no GST at all. And it pays no GST on fodder and feed, which is the biggest running cost of a stall-fed unit. It does pay 5% on medicines, vaccines and machinery. If the farm isn't registered, or sells only exempt goods, that 5% is a cost it can't recover, because Section 17(2) of the CGST Act blocks input tax credit on inputs used for exempt supplies. The mill making your feed carries the same block, which our cattle and poultry feed mills guide explains.
Services around the farm are mostly exempt too, under Notification 12/2017-Central Tax (Rate):
- Vet visits: services by a veterinary clinic for the health care of animals are nil (S. No. 46).
- Slaughtering: a slaughterhouse charging you for slaughtering your animals charges nil (S. No. 56).
- Truck freight: a goods transport agency carrying "agricultural produce" charges nil (S. No. 21(a)). The notification's definition of agricultural produce includes produce from rearing animals for food or fibre that isn't processed further, which fits live animals going to the shandy.
Does your goat farm need GST registration?
Many farmers assume they're covered by the "agriculturist" exemption. They aren't. Section 23(1)(b) of the CGST Act only covers supplies of produce out of cultivation of land, and rearing animals isn't cultivation. The rule that protects a goat farm is a different one.
Step-by-Step Guide
Does Your Goat or Sheep Farm Need GST Registration?
List everything you sell
Live goats and sheep, fresh mutton, raw wool, fresh milk, loose manure: all exempt. Labelled packs of frozen mutton, raw skins, bagged and labelled manure, or a taxable service such as renting out a vehicle: taxable.
Only exempt items? Stop here
Section 23(1)(a) of the CGST Act: a person supplying only wholly exempt goods or services isn't liable to register, whatever the turnover.
Any taxable item? Add up aggregate turnover
Section 2(6) counts taxable AND exempt sales. Your live animal sales count, even though they carry no GST.
Compare with the limit
For goods only: Rs 40 lakh in most states, Rs 20 lakh in Telangana and nine other states (Notification 10/2019-Central Tax). Add a taxable service and the Rs 20 lakh services limit applies.
Over the limit? Register
Charge GST only on the taxable lines. Exempt lines go on the same bill at nil and are reported as exempt supplies in your returns.
Source: Sections 2(6), 17(2), 22 and 23(1), CGST Act 2017; Notification 10/2019-Central Tax
Example: a stall-fed farm near Mahabubnagar sells Rs 30 lakh of live goats in FY 2025-26. That's all exempt, so it doesn't register. Next year it starts selling Rs 6 lakh of frozen mutton in labelled 1 kg packs through a local supermarket.
- Aggregate turnover: Rs 30,00,000 + Rs 6,00,000 = Rs 36,00,000.
- That's over Telangana's Rs 20 lakh goods limit, so the farm must register, even though only Rs 6 lakh of sales are taxable.
- GST is 5% on the frozen packs only: 5% of Rs 6,00,000 = Rs 30,000.
- Sell the same mutton fresh, or frozen but loose and unlabelled, and no registration is needed.
Our GST registration service handles the application, and our turnover limit guide explains aggregate turnover in more detail. If you also run a mutton counter, see our chicken and mutton shop guide.
Rearing someone else's animals. Some farms fatten lambs or kids owned by a trader or exporter and charge a fee per head or per month. S. No. 55 of Notification 12/2017-Central Tax (Rate) exempts carrying out an intermediate production process as job work in relation to rearing of all life forms of animals (except horses) for food, fibre or similar products. Keep a written agreement and the head-count records, because they show the animals were never yours. On the income tax side, your turnover is then the fee you receive, not the value of the animals.
Income tax: why goat farming isn't "farm income" for tax
Section 2(1A) of the Income-tax Act 1961 defines agricultural income as rent or revenue from land in India used for agricultural purposes, and income from such land by agriculture, by the processes a cultivator uses to make produce fit for market, or by selling that produce. Every limb ties back to cultivating land. Rearing goats and sheep doesn't, even when the animals graze on your own fields.
So a farmer who grows jowar and also runs a goat shed has two incomes. The jowar income is agricultural income, exempt under Section 10(1) but counted for rate purposes (see our agricultural income guide). The goat income is business income under "Profits and gains of business or profession", fully taxable. Poultry and dairy work the same way; our poultry farm guide and dairy farm guide cover them.
Section 44AD. A resident individual, HUF or partnership firm (not an LLP) whose turnover is within Rs 2 crore, or Rs 3 crore if cash receipts are within 5% of turnover, can declare deemed profit of 6% of receipts through banking channels and 8% of the rest. No books of account are needed for that business, and you can file ITR-4 if total income is within Rs 50 lakh and the other conditions are met.
Example (stall-fed farm, proprietor, new tax regime, FY 2025-26): sales of Rs 1,20,00,000, of which Rs 30,00,000 was collected in cash from buyers in the Bakrid weeks. Cash is 25% of turnover, so the Rs 2 crore limit applies, and Rs 1.2 crore is within it.
- 6% of Rs 90,00,000 (bank and UPI) = Rs 5,40,000.
- 8% of Rs 30,00,000 (cash) = Rs 2,40,000.
- Deemed profit: Rs 7,80,000.
- Tax: Rs 4-7.8 lakh at 5% = Rs 19,000.
- Income is within Rs 12 lakh, so the Section 87A rebate of up to Rs 60,000 covers it. Tax payable: nil, but the return still has to be filed.
Had all Rs 1.2 crore come by bank transfer or UPI, deemed profit would be 6% of the full amount, Rs 7,20,000, which is Rs 60,000 lower. Asking buyers to pay by UPI lowers the presumptive figure directly.
Tax Rate Chart
New Tax Regime Slabs, FY 2025-26 (AY 2026-27)
Up to Rs 4 lakh
Rs 4-8 lakh
Rs 8-12 lakh
Rs 12-16 lakh
Rs 16-20 lakh
Rs 20-24 lakh
Above Rs 24 lakh
Source: Section 115BAC(1A), Income-tax Act 1961, as amended by Finance Act 2025
When a season goes badly. Disease outbreaks, deaths in a monsoon or a weak Bakrid market can push actual profit below 6%. You can then declare actual profit, but watch Section 44AD(4): if you used 44AD in any of the previous five years and now declare less, you can't return to 44AD for the next five years. If your income is above the basic exemption limit, Sections 44AD(5) and 44AB(e) then require you to keep books and get a tax audit. Separately, a business keeping books needs an audit once turnover crosses Rs 1 crore, or Rs 10 crore if cash receipts and cash payments are each within 5% (Section 44AB(a)). Our tax audit guide explains both.
From FY 2026-27 the Income-tax Act 2025 replaces the 1961 Act and section numbers change, but your FY 2025-26 return still follows the 1961 Act.
Cash, Bakrid sales and big buyers: three rules to know
Cash from buyers. Section 269ST bars receiving Rs 2 lakh or more in cash from one person in a day, for a single transaction, or for transactions relating to one event. Say a trader lifts 20 goats at Rs 12,000 each before Bakrid and pays Rs 2,40,000 in cash on the spot. That breaks the rule, and Section 271DA sets the penalty at Rs 2,40,000, the full amount. Ten families each paying Rs 15,000 in cash for one animal is fine, because each receipt is from a different person. Take bulk sales by bank transfer or UPI. Our cash transaction limits guide has more examples.
Cash you pay out. If you keep books, Section 40A(3) disallows an expense where cash payments to one person in a day exceed Rs 10,000. There's a carve-out that matters for livestock: Rule 6DD(e)(ii) of the Income-tax Rules 1962 exempts payments for the produce of animal husbandry (including livestock, meat, hides and skins) made to the cultivator, grower or producer. Buying 10 breeding does for Rs 1,20,000 in cash directly from the farmer who reared them falls within it. Buying the same animals from a livestock trader doesn't, and that purchase is at risk. From 1 April 2026 the limit is Section 36(4) of the Income-tax Act 2025 and the same carve-out is Rule 26(1)(e)(ii) of the Income-tax Rules 2026. See our Section 40A(3) guide. If you're on Section 44AD, expenses aren't claimed separately, so this rule bites only when you declare actual profit from books.
TDS by meat processors and exporters. A buyer whose turnover exceeded Rs 10 crore in the previous year deducts TDS at 0.1% under Section 194Q on purchases from you above Rs 50 lakh in a year. From 1 April 2026 the same deduction sits in Section 393(1), Table S. No. 8(ii), of the Income-tax Act 2025. It applies to exempt goods like live animals too. Check Form 26AS or AIS and claim the credit in your return. See our Section 194Q guide.
Common mistakes goat and sheep farmers make
- Treating goat income as agricultural income. It isn't, under Section 2(1A). Not filing because "farm income is exempt" leaves a 44AD-level profit untaxed and any TDS unclaimed.
- Relying on the "agriculturist" GST exemption. Section 23(1)(b) covers produce from cultivation of land. A goat farm stays out of GST because it supplies only exempt goods (Section 23(1)(a)), and that stops working the day you add a taxable product such as labelled frozen mutton or raw skins.
- Leaving live animal sales out of aggregate turnover. Once you sell anything taxable, exempt sales count toward the registration limit.
- Bulk Bakrid sales in cash. Rs 2 lakh or more from one buyer in a day triggers a penalty equal to the amount.
- Missing the filing window. Goat farming is business income, so the original due date for an AY 2026-27 return without a tax audit was 31 August 2026 (31 July applies to ITR-1 and ITR-2 filers with no business income). A belated return can still be filed by 31 December 2026 (Section 139(4)), with a late fee of Rs 5,000, or Rs 1,000 if total income is within Rs 5 lakh (Section 234F).
How Tax Garden helps goat and sheep farms
We check whether your product mix keeps you outside GST or pushes you over the limit, register you if needed and set up invoices that separate exempt and 5% lines. At year end we compare Section 44AD with your actual profit, which matters after a season with heavy losses, and file through our ITR filing service. For larger farms that keep books, our accounting and bookkeeping service handles the ledgers.
