Looking for expert help with Ice factory GST rate and HSN code? 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
- Plain ice is 5% GST under HSN 2201 90 10 (Notification 9/2025-CT(R), Schedule I, S. No. 147), whether it's block ice for boats or cubes for drinks.
- Ice candy and flavoured edible ice (2105) are also 5%, but their makers can't use the Rs 40 lakh registration limit or the composition scheme.
- Composition at 1% of turnover is open to plain ice makers with turnover up to Rs 1.5 crore who sell only within the State. Opt in on Form CMP-02 before 1 April.
- Electricity is nil-rated, so there's no credit on power. Credit on compressors and freezers at 18% can't be refunded, but it offsets your 5% output tax.
- Cash from one buyer is capped below Rs 2 lakh a day (Section 269ST; Section 186 of the 2025 Act). Section 44AD lets small plants declare 6% or 8% of turnover.
What is the GST rate on ice and its HSN code? Ice is taxed at 5% GST under HSN 2201 90 10, "Ice and snow" (Notification 9/2025-Central Tax (Rate), Schedule I, S. No. 147, in force from 22 September 2025). That's 2.5% CGST plus 2.5% SGST within a State. Flavoured edible ice such as ice candy falls under 2105, also at 5%.
An ice factory's customers rarely send purchase orders. Fishing boats load ice at 4 a.m. before a trip, fish vendors pick up a few slabs, and juice shops, caterers and wedding halls buy cubes. Most of them pay in cash or UPI, and few of them can use a GST invoice. That shapes every tax decision you make: whether to register, whether composition beats regular GST, what to do with the credit on a new compressor, and how much cash you can take from one boat owner. This post covers FY 2025-26 (AY 2026-27) under the Income-tax Act 1961, and points out the Income-tax Act 2025 sections that apply from 1 April 2026. It's for owners and accountants of block ice plants, ice cube units and ice candy makers. If you also store fish or produce, our cold storage guide covers storage charges.
What GST rate applies to your ice and your inputs?
Ice is one of the simpler products to classify. The output rate is 5% on both plain ice and edible ice. Your inputs are where the rates spread out.
Tax Rate Chart
GST for Ice Factories (from 22 September 2025)
Ice and snow: block ice, crushed ice, ice cubes (2201 90 10)
9/2025-CT(R) Sch I, S. No. 147
Ice candy, ice lollies and other edible ice (2105 00 00)
9/2025-CT(R) Sch I, S. No. 141
Ammonia refrigerant (2814)
9/2025-CT(R) Sch I, S. No. 217
Electrical energy (2716 00 00)
10/2025-CT(R) S. No. 111
Plain water, not in sealed containers (2201)
10/2025-CT(R) S. No. 103
Compressors (8414) and refrigerating or freezing equipment (8418)
9/2025-CT(R) Sch II, S. Nos. 401, 407
Steel tanks and cans up to 300 litres (7310)
9/2025-CT(R) Sch II, S. No. 288
Plastic bags and packing (3923)
9/2025-CT(R) Sch II, S. No. 124
Source: CBIC Notifications 9/2025-CT(R) and 10/2025-CT(R), 17 September 2025, in force 22 September 2025; CT(R) list checked up to 01/2026-CT(R)
Plain ice versus edible ice. The tariff has two different homes for ice. "Ice and snow" (2201 90 10) is frozen water: the 50 kg blocks you sell to trawlers, crushed ice for fish markets and bagged cubes for bars and caterers. "Ice cream and other edible ice" (2105 00 00) covers products made to be eaten as they are, such as ice lollies, ice candy and flavoured gola. The rate is 5% on both, but the registration limit and the composition scheme treat them differently, as the next two sections show. If your unit runs both lines, keep separate stock and sales records for each.
What 5% looks like on a bill. Say a boat owner buys 40 blocks at Rs 400 each before a trip. That's Rs 16,000 of ice, and GST at 5% is Rs 800 (Rs 400 CGST plus Rs 400 SGST), so the bill is Rs 16,800.
Do you need GST registration?
Plain ice makers get the higher limit. Notification 10/2019-Central Tax exempts a person "engaged in exclusive supply of goods" with aggregate turnover up to Rs 40 lakh in the year. It doesn't apply to intra-State sellers in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand. There, Section 22(1) of the CGST Act sets Rs 20 lakh, or Rs 10 lakh in Manipur, Mizoram, Nagaland and Tripura. An ice plant in Kakinada or Kochi can sell up to Rs 40 lakh before registering; one in Hyderabad has to register at Rs 20 lakh.
Edible ice makers don't. The same notification lists "Ice cream and other edible ice" (2105 00 00) as Table S. No. 1, so a unit making ice candy falls back to the Rs 20 lakh limit even if it supplies only goods. Our ice cream parlour guide covers that product line in detail.
Inter-State sales. A plant near a State border that supplies ice to boats or traders in the next State must register from the first such sale, whatever its turnover (Section 24). Our registration limit guide explains how aggregate turnover is counted, and our GST registration service files the application.
Composition at 1% or regular GST at 5%: which suits an ice plant?
Most ice plants sell to buyers who can't claim credit: fishermen, vendors, small shops. For them the 5% is just a higher price. That's why composition often works for this trade.
Who can opt in. Under Notification 14/2019-Central Tax, a registered person whose turnover in the previous year was up to Rs 1.5 crore can opt for composition. The limit is Rs 75 lakh in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand. The notification bars manufacturers of ice cream and other edible ice (2105), pan masala and tobacco, with aerated water (2202 10 10) added by Notification 43/2019-Central Tax and bricks and roofing tiles added from 1 April 2022. Plain ice (2201 90 10) isn't on the list. You also can't make inter-State sales or sell through an e-commerce operator that collects tax at source (Section 10(2)(c) and (d)).
What you pay. A manufacturer pays 1% of turnover in the State: 0.5% CGST plus 0.5% SGST (Rule 7, CGST Rules). You issue a bill of supply, can't collect GST from buyers and can't claim input tax credit.
Worked example. An ice plant in Andhra Pradesh sells Rs 90,00,000 of block ice in a year to fishing boats and vendors. Prices are fixed by the local market, so buyers pay the same amount either way. The plant pays GST of Rs 95,000 to its suppliers on ammonia, plastic bags, cans and repair services.
| Item | Regular GST | Composition |
|---|---|---|
| Amount collected from buyers | Rs 90,00,000 | Rs 90,00,000 |
| GST inside that amount (5/105 of Rs 90,00,000) | Rs 4,28,571 | Not applicable |
| Composition tax (1% of Rs 90,00,000) | Not applicable | Rs 90,000 |
| GST paid to suppliers on inputs and services | Rs 95,000 (claimed as credit) | Rs 95,000 (becomes a cost) |
| Cash paid to the government | Rs 3,33,571 | Rs 90,000 |
| Total GST borne by the plant | Rs 4,28,571 | Rs 1,85,000 |
Composition saves Rs 2,43,571 in this case. The comparison turns the other way if a large share of your ice goes to seafood exporters, processors or hotels that want a tax invoice so they can claim credit. A composition dealer can't issue one, and those buyers may move to a supplier who can.
Comparison
Regular GST vs Composition for an Ice Plant
| Parameter | Regular (5%) | Composition (1%) |
|---|---|---|
| Tax on sales | 5% charged on the invoice | 1% of turnover, paid from your own pocket |
| Credit on ammonia, cans, compressors | Allowed | Not allowed |
| Selling to exporters and hotels | Tax invoice, they claim credit | Bill of supply, no credit for them |
| Inter-State sales | Allowed | Barred (Section 10(2)(c)) |
| Returns | GSTR-1 and GSTR-3B | CMP-08 by the 18th after each quarter; GSTR-4 by 30 June |
| Ice candy (2105) makers | Allowed | Barred (Notification 14/2019-CT) |
Source: CGST Act Section 10; CGST Rules 3, 7 and 62; Notifications 14/2019-CT and 43/2019-CT
Step-by-Step Guide
How an Ice Plant Moves to Composition
Check last year's turnover
Aggregate turnover in the previous financial year must be up to Rs 1.5 crore, or Rs 75 lakh in the eight States named in Notification 14/2019-Central Tax.
Confirm you make only plain ice
If you also make ice candy or other edible ice (2105), you can't opt in (Notification 14/2019-CT, Table S. No. 1).
File Form GST CMP-02 before 1 April
Intimate the option on the GST portal before the financial year starts (Rule 3(3), CGST Rules).
File Form GST ITC-03 within 60 days
Report and pay back the credit on stock of inputs and on capital goods, as Rule 3(3) and Rule 44(4) require.
Pay quarterly, file yearly
Pay tax in cash through CMP-08 by the 18th of the month after each quarter, and file GSTR-4 by 30 June after the year ends (Rule 62).
Source: CGST Rules 3, 44 and 62
Our composition scheme guide has the full eligibility list.
What happens to the credit on a new compressor?
If you stay on regular GST, the biggest credits usually come from machinery. Say you replace a compressor and condenser for Rs 15,00,000 plus 18% GST. That's Rs 2,70,000 of credit. If your monthly sales are Rs 8,00,000, your output tax is Rs 40,000 a month, so the credit takes about seven months to use up.
You can't speed this up with a refund. Section 54(3)(ii) of the CGST Act allows a refund where credit builds up because inputs carry a higher rate than output, and Rule 89(5) works it out on "Net ITC", which it defines as credit "availed on inputs". A compressor is a capital good, not an input, so its credit stays in the ledger. Ammonia at 5% matches your 5% output, so it doesn't create a build-up either. Our inverted duty refund guide explains when a refund does apply.
Two smaller points. Electricity is nil-rated (Notification 10/2025-CT(R), S. No. 111), so your power bill carries no GST and gives no credit. And if you switch to composition, you pay back the credit on capital goods you still hold through Form ITC-03, so time big machinery purchases with that in mind.
Income tax for ice factory owners
Cash from boats and vendors. Section 269ST of the 1961 Act bars receiving Rs 2,00,000 or more in cash from one person in a day, for one transaction, or for one event. From 1 April 2026 it's Section 186 of the 2025 Act. The penalty equals the amount received (Section 271DA; Section 451 of the 2025 Act). A trawler owner who settles a month of ice purchases in one go can cross this line. Ask for UPI or a bank transfer above Rs 1,99,999. Our cash transaction limits guide has the related rules.
Cash you pay. A cash payment above Rs 10,000 to one person in a day isn't allowed as a business expense (Section 40A(3) of the 1961 Act; Section 36(4) of the 2025 Act). Pay your ammonia supplier, mechanic and transporter by bank. Our Section 40A(3) guide lists the exceptions.
Section 44AD for smaller plants. A resident individual, HUF or partnership firm (not an LLP) can declare 6% of turnover received by bank, UPI or account payee cheque by the return due date and 8% of the rest. Turnover must be up to Rs 2 crore, or Rs 3 crore where cash receipts stay within 5% (Section 44AD of the 1961 Act; Section 58 of the 2025 Act). Take the plant above: Rs 60,00,000 by UPI and bank and Rs 30,00,000 in cash. The minimum income is 6% of Rs 60,00,000 (Rs 3,60,000) plus 8% of Rs 30,00,000 (Rs 2,40,000), so Rs 6,00,000. Because cash receipts are a third of turnover, the Rs 2 crore limit applies, not Rs 3 crore. Our Section 44AD guide explains the five-year lock-out if you drop out of the scheme.
Audit and due dates. A tax audit is needed above Rs 1 crore of turnover, or Rs 10 crore where cash receipts and cash payments each stay within 5% (Section 44AB of the 1961 Act; Section 63 of the 2025 Act). Since ice sales are cash-heavy, plan for the Rs 1 crore limit. For tax year 2026-27 under Section 263(1) of the 2025 Act, the return is due by 31 August 2027 for a business without audit and 31 October 2027 if audited. Our ITR filing service handles the return.
Common mistakes ice plants make
- Treating ice candy as plain ice. Flavoured edible ice is 2105, not 2201. It loses the Rs 40 lakh limit and the composition option.
- Opting for composition while supplying exporters. If your largest buyers need a tax invoice to claim credit, composition can cost you the account.
- Buying a big compressor just before moving to composition. The unused credit has to be paid back through ITC-03.
- Expecting a refund on machinery credit. Inverted duty refunds cover inputs only (Rule 89(5)). Capital goods credit is used against future output tax.
- Taking Rs 2 lakh or more in cash from one boat owner in a day. The penalty under Section 271DA is the full amount received.
- Not registering after crossing the limit in a State such as Telangana, where the limit is Rs 20 lakh, not Rs 40 lakh.
How Tax Garden helps ice factories
We check your products and buyers, work out whether composition or regular GST costs you less, and file the CMP-02 or your monthly GSTR-1 and GSTR-3B through our GST return filing service. We track the credit on compressors and refrigeration plant, keep your cash sales within the limits, and file your income tax return. Books are kept by our accounting and bookkeeping service. Call or WhatsApp us on 9640290977.
Related reading: Seafood processors and exporters guide | Fish farming guide | Packaged drinking water plants guide | Cold storage owners guide
