Looking for expert help with Income tax and GST for paper plate, paper cup and leaf plate makers 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
- Paper plates, paper cups and other articles of paper or paperboard (heading 4823) are 18% GST (Notification 9/2025-CT(R), Schedule II, S. No. 189). Paper pulp moulded trays are 5% (Schedule I, S. No. 323).
- Plates and cups made of leaves, flowers or bark, including khali dona, are exempt (Notification 10/2025-CT(R), S. No. 125 and 126).
- A unit making only leaf plates needn't register for GST (Section 23(1)(a), CGST Act). Add paper items and the leaf sales count toward the Rs 40 lakh (Rs 20 lakh in Telangana) threshold; any inter-State paper sale needs registration.
- Making both? Reverse the exempt share of common credit every month under Rule 42.
- Income tax: Section 44AD deems 6% of digital receipts and 8% of cash receipts as profit, for turnover up to Rs 2 crore (Rs 3 crore with cash within 5%).
What is the GST rate on paper plates and leaf plates? Paper plates and paper cups are 18% GST: 9% CGST plus 9% SGST under Schedule II, S. No. 189 of Notification 9/2025-Central Tax (Rate), in force from 22 September 2025. Plates and cups made of leaves, flowers or bark are exempt under S. No. 126 of Notification 10/2025-Central Tax (Rate). Paper pulp moulded trays are 5%.
A tiffin centre buying 1,000 paper plates pays 18% GST on them. The same caterer buying 1,000 areca leaf plates pays nothing. For a small unit that runs a paper plate machine next to a leaf press, that one difference decides whether you register, what you can claim as credit and how your CA splits your purchase bills. This guide is for paper plate and cup makers, areca and sal leaf plate units, disposable tableware traders and the CAs who keep their books. It covers GST from 22 September 2025, and income tax for FY 2025-26 (AY 2026-27) under the Income-tax Act 1961, with the Income-tax Act 2025 numbers that apply from 1 April 2026.
Paper plate, paper cup and leaf plate GST rate and HSN code
The material decides the rate. Here's how the products and inputs of a typical disposable plate unit are treated after the 22 September 2025 rate changes:
Comparison
GST on Disposable Plates, Cups and Their Inputs from 22 September 2025
| Product (HSN) | GST | Notification entry |
|---|---|---|
| Paper plates, paper cups, paper bowls and other articles of paper or paperboard (4823) | 18% | 9/2025-CT(R), Schedule II, S. No. 189 |
| Paper pulp moulded trays (4823) | 5% | 9/2025-CT(R), Schedule I, S. No. 323 |
| Plates and cups made of all kinds of leaves, flowers or bark (46) | Nil | 10/2025-CT(R), S. No. 126 |
| Khali dona; goods made of sal, siali or sisal leaves or sabai grass (46) | Nil | 10/2025-CT(R), S. No. 125 |
| Plastic tableware (3924), where lawfully sold | 18% | 9/2025-CT(R), Schedule II, S. No. 125 |
| Coated paperboard, your input (4810 / 4811) | 18% | 9/2025-CT(R), Schedule II, S. No. 177 and 178 |
| Uncoated kraft paper and paperboard, your input (4804) | 18% | 9/2025-CT(R), Schedule II, S. No. 169 |
Source: Notification 9/2025-Central Tax (Rate) and 10/2025-Central Tax (Rate), 17 September 2025, in force 22 September 2025. Notification 01/2026-Central Tax (Rate) amends none of these entries.
Three things follow from this table:
- No inverted duty for paper plate makers. Your paperboard comes in at 18% and your plates go out at 18%, so credit on board is used up against output tax. You won't usually pile up credit, unlike the paper bag makers who sell at 5%.
- Poly-coated cups are 18% either way. Cup stock is paperboard with a thin polyethylene layer. Whether a cup is classified as an article of paper (4823) or plastic tableware (3924), the rate is the same 18%.
- The 5% entry is narrow. It says "paper pulp moulded trays", not plates or bowls. If you make moulded pulp or bagasse plates and want to bill them at 5%, get your CA's written view first. Billing 5% when 18% applies leaves you liable for the 13% difference, plus interest.
Leaf plates are pressed from leaves or, for areca plates, from the palm's fallen leaf sheath. If you laminate or line them with plastic or paper, the product may no longer be a plate "made up of" leaves. Settle that with your CA before you drop GST from the invoice.
Do you need GST registration?
Not if everything you sell is leaf plates, cups and dona. Section 23(1)(a) of the CGST Act says a person "engaged exclusively in the business of supplying goods ... that are not liable to tax or wholly exempt from tax" isn't liable to register, whatever the turnover.
Start selling paper plates or cups and that changes. The normal threshold then applies to aggregate turnover, which Section 2(6) defines to include exempt supplies. Your leaf plate sales count.
Example (Telangana unit, FY 2026-27): you sell Rs 16 lakh of areca leaf plates to caterers in Hyderabad, and you've added a paper cup machine that brings in Rs 5 lakh. Aggregate turnover is Rs 21 lakh. Telangana is one of the States excluded from the Rs 40 lakh goods limit (Notification 10/2019-Central Tax), so your limit is Rs 20 lakh and you must register. With only the Rs 16 lakh of leaf plates, you wouldn't.
The inter-State rule catches more units than the turnover rule. Section 24(i) requires registration for any inter-State taxable supply, so one box of paper cups sent to a distributor across the border means you register, even at Rs 3 lakh turnover. Our GST registration limit guide has the full State list, and our GST registration service handles the application.
Making both leaf and paper plates: the credit you have to reverse
Once registered, you can claim credit only on tax that relates to taxable sales. Section 17(2) of the CGST Act restricts credit on goods and services used partly for taxable and partly for exempt supplies to the share that goes into taxable supplies. Rule 42 of the CGST Rules works out that share from your turnover.
Step-by-Step Guide
Working Out Your Credit as a Mixed Plate Unit
Credit used only for paper items
Paperboard, cup stock and printing on cups. Full credit.
Credit used only for leaf items
Raw leaf sheaths, dies for the leaf press and shrink wrap used only for leaf packs. No credit.
Common credit
Shed rent, machine repairs, freight and cartons that serve both lines. Reverse the share equal to exempt turnover over total turnover in the State (Rule 42).
True up at year end
Rule 42 is worked each month and recomputed on the full year's figures. Adjust the difference in your return.
Source: CGST Act 2017, Section 17(2); Rule 42, CGST Rules 2017
Example (one month): you sell Rs 3,00,000 of leaf plates (exempt) and Rs 7,00,000 of paper plates and cups at 18%, so output tax is Rs 1,26,000. Credit on paperboard used only for paper items is Rs 90,000. Common credit on rent, repairs and freight is Rs 18,000. Exempt turnover is 30% of the total (3 out of 10 lakh), so you reverse Rs 5,400 of the common credit and keep Rs 12,600. Total credit is Rs 1,02,600 (Rs 90,000 plus Rs 12,600), and you pay Rs 23,400 in cash (Rs 1,26,000 less Rs 1,02,600).
Our Rule 42 and 43 guide explains the formula and the annual recalculation, including the separate rule for machines used for both lines.
Should a plate unit opt for composition?
A plate maker is a manufacturer for composition purposes, because pressing board or leaves into plates gives a new product with a distinct name and use (Section 2(72), CGST Act). Rule 7 taxes manufacturers on turnover in the State, and Section 2(112) includes exempt supplies in that figure.
Comparison
Composition vs Regular GST for a Plate Maker
| Point | Composition (manufacturer) | Regular scheme |
|---|---|---|
| Tax rate | 1% (0.5% CGST + 0.5% SGST) of turnover in the State | 18% on paper items, nil on leaf items |
| Leaf plate sales | Taxed at 1% | No tax |
| Credit on paperboard | Not allowed | Allowed (subject to Rule 42) |
| Your buyer's credit | Not available; you can't charge GST | Available on your tax invoice |
| Inter-State sales | Not allowed (Section 10(2)(c)) | Allowed |
| Turnover limit | Rs 1.5 crore in the preceding year | None |
Source: CGST Act 2017, Sections 2(72), 2(112), 10(1) and 10(2)(c); Rule 7, CGST Rules 2017; Notification 14/2019-Central Tax
Example: a unit with Rs 30 lakh of leaf plates and Rs 20 lakh of paper plates pays 1% of Rs 50 lakh under composition, which is Rs 50,000, including Rs 30,000 on leaf plates that carry no GST under the regular scheme. Under the regular scheme it charges 18% on Rs 20 lakh (Rs 3,60,000) but sets off credit on its paperboard, and its hotel and caterer buyers can claim that 18% back.
For a mainly-leaf unit with a small paper line selling to households and street vendors, composition can still work. For a unit selling cups to restaurants, hotels and corporate canteens that want a tax invoice, the regular scheme usually wins. Our composition scheme guide covers the remaining conditions.
Income tax: Section 44AD for plate makers
Profit from making and selling plates is business income. If you're a resident individual, HUF or partnership firm (not an LLP), Section 44AD of the Income-tax Act 1961 lets you skip detailed profit accounts for FY 2025-26:
- Deemed profit: 6% of turnover received by bank transfer, UPI, cheque or other digital mode, and 8% of the rest. You can declare more.
- Turnover limit: Rs 2 crore, or Rs 3 crore if cash receipts are within 5% of turnover.
- Depreciation is treated as already allowed. Section 44AD(2) deems deductions under Sections 30 to 38 given, so you can't claim depreciation on your plate machines on top.
- Five-year lock: opt out after using 44AD and you can't come back for the next five years (Section 44AD(4)).
From 1 April 2026 (FY 2026-27 onwards) the same scheme sits in Section 58 of the Income-tax Act 2025, with the same 6% / 8% rates and Rs 2 crore / Rs 3 crore limits.
Example (proprietor, FY 2025-26): turnover Rs 72,00,000, of which Rs 66,00,000 came by bank or UPI and Rs 6,00,000 in cash. Cash is 8.33% of turnover, above 5%, so the limit is Rs 2 crore, and Rs 72 lakh is within it. Deemed profit is Rs 3,96,000 (6% of Rs 66 lakh) plus Rs 48,000 (8% of Rs 6 lakh), so Rs 4,44,000. With no other income, that's within Rs 12 lakh, so under the new tax regime the Section 87A rebate brings the tax to nil.
If your real margin is lower than 6%, for example in a year you bought a new automatic cup machine, keep full books and claim actual profit with depreciation. Check the audit rules with your CA first. See our Section 44AD guide and old vs new regime guide.
Missed the 31 August 2026 due date for AY 2026-27 (the date for business income without a tax audit)? A belated return can still be filed up to 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).
Common mistakes plate makers make
- Billing paper plates at 5%. Only paper pulp moulded trays are at 5%. Pressed paper plates, paper cups and bowls of paperboard are 18%.
- Charging GST on leaf plates. A registered unit sometimes adds 5% or 18% on areca plates out of habit. They're exempt, and GST collected on them still has to be paid to the government (Section 76, CGST Act).
- Ignoring leaf turnover for the threshold. Exempt sales count in aggregate turnover. A Telangana unit with Rs 15 lakh of leaf plates and Rs 6 lakh of paper cups has crossed Rs 20 lakh.
- Claiming full credit on common costs. Rent, repairs and freight shared by both lines need the Rule 42 reversal every month.
- Shipping one carton across the State border unregistered. Section 24(i) makes registration compulsory for any inter-State taxable sale.
- Still making plastic plates and cups. These items have been banned since 1 July 2022 (MoEFCC backgrounder published by PIB). Switching the line to paper or leaf is the lawful route.
How Tax Garden helps plate and cup makers
We check whether you need to register, get you registered through our GST registration service when you do, and set up your item master so leaf and paper items are billed at the right rate. Every month we file GSTR-1 and GSTR-3B through our GST return filing service and work out the Rule 42 reversal for mixed units. At year end we compare Section 44AD against actual profit and file your ITR through our ITR filing service. Call or WhatsApp us on 9640290977.
Related reading: GST on printing and packaging and income tax for caterers, two of your biggest buyer groups.
