Looking for expert help with GST and income tax for poultry 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 poultry, eggs in shell, fresh chicken and poultry feed are all exempt from GST from 22 September 2025 (Notification 10/2025-Central Tax (Rate), S. No. 5, 18, 8 and 105).
- A farm selling only exempt items doesn't need GST registration, however large its turnover (Section 23(1)(a), CGST Act). Pre-packaged and labelled frozen chicken and egg powder are 5%, and they bring the turnover limit into play.
- Poultry income is not agricultural income under Section 2(1A) of the Income-tax Act 1961. It's taxed as business income, even when the shed stands on farmland.
- Contract growers who rear an integrator's birds for a growing charge fall under the GST job work exemption for rearing animals for food (Notification 12/2017-Central Tax (Rate), S. No. 55).
- Never take Rs 2 lakh or more in cash from one trader in a day (Section 269ST). The penalty equals the amount received.
Is poultry 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 birds is not cultivation of land. A poultry 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.
Most poultry farmers in Telangana and Andhra Pradesh hear two things from the village: "there's no GST on chicken" and "farm income is tax-free". The first is mostly right. The second is wrong for poultry, and it's the reason many broiler and layer farmers have never filed a return they actually owed. This guide covers both taxes for FY 2025-26 (AY 2026-27), under the Income-tax Act 1961 and the GST rates in force since 22 September 2025, for farms that sell their own birds and for growers who work on contract for an integrator.
What a poultry farm buys and sells, and the GST on each
Nearly everything moving through a poultry farm is GST-free. The exceptions are processed products sold in labelled retail packs, and equipment.
Comparison
GST on Poultry Farm Products and Inputs from 22 September 2025
| Item | GST | Entry |
|---|---|---|
| Live poultry: fowls (broilers, layers, day-old chicks), ducks, geese, turkeys, guinea fowls (0105) | Nil | Notif 10/2025-CT(R), S. No. 5 |
| Birds' eggs in shell, fresh, preserved or cooked, including hatching eggs (0407) | Nil | Notif 10/2025-CT(R), S. No. 18 |
| Chicken meat and offal, fresh or chilled, packed or loose (0207) | Nil | Notif 10/2025-CT(R), S. No. 8 |
| Frozen chicken, not pre-packaged and labelled | Nil | Notif 10/2025-CT(R), S. No. 9 |
| Poultry feed, supplements and additives, de-oiled cake (2301, 2302, 2308, 2309) | Nil | Notif 10/2025-CT(R), S. No. 105 |
| Organic manure (poultry litter), not pre-packaged and labelled (3101) | Nil | Notif 10/2025-CT(R), S. No. 116 |
| Frozen chicken, pre-packaged and labelled | 5% | Notif 9/2025-CT(R), Sch I, S. No. 2 |
| Eggs not in shell, egg yolks, egg powder (0408) | 5% | Notif 9/2025-CT(R), Sch I, S. No. 9 |
| Organic fertiliser, pre-packaged and labelled (3101) | 5% | Notif 9/2025-CT(R), Sch I, S. No. 237 |
| Poultry-keeping machinery, incubators and brooders, parts (8436) | 5% | Notif 9/2025-CT(R), Sch I, S. No. 434 |
| Medicines put up for retail sale (3004) | 5% | Notif 9/2025-CT(R), Sch I, S. No. 234 |
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
Two things follow from this table. First, a farm selling birds and eggs charges no GST on them. Second, it pays no GST on feed, which is usually 60-70% of its cost, but it does pay 5% on new incubators, brooders, feeders and medicines. If the farm isn't registered, or sells only exempt goods, that 5% is a cost it can't recover. Section 17(2) of the CGST Act blocks input tax credit on inputs used for exempt supplies.
Transport is usually exempt too. Notification 12/2017-Central Tax (Rate) defines "agricultural produce" to include produce from rearing animals for food on which no further processing is done, and S. No. 21(a) exempts a goods transport agency's freight for carrying agricultural produce. Live birds and eggs in shell going to market fit that description. Processed or packed goods don't.
Does your poultry farm need GST registration?
Farmers often assume they're covered by the "agriculturist" exemption. They're not. Section 23(1)(b) of the CGST Act only covers supplies of "produce out of cultivation of land", and rearing birds isn't cultivation. The rule that helps a poultry farm is a different one.
Step-by-Step Guide
Does Your Poultry Farm Need GST Registration?
List everything you sell
Live birds, chicks, eggs in shell, fresh chicken, loose poultry litter: all exempt. Pre-packaged and labelled frozen chicken, egg powder, labelled manure bags, or a taxable service like renting out a shed to another farmer: 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 egg and broiler 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 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 layer farm near Siddipet sells Rs 45 lakh of eggs in shell in FY 2025-26. That's all exempt, so it doesn't register. Next year it starts selling Rs 8 lakh of frozen chicken from spent hens in labelled 1 kg retail packs.
- Aggregate turnover: Rs 45,00,000 + Rs 8,00,000 = Rs 53,00,000.
- That's over Telangana's Rs 20 lakh goods limit, so the farm must register, even though only Rs 8 lakh of sales are taxable.
- GST is 5% on the frozen packs only: 5% of Rs 8,00,000 = Rs 40,000.
- Sell the same spent hens live or as fresh chicken 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 retail chicken counter, see our chicken and mutton shop guide.
Own birds or contract growing: which are you?
Most broiler farms in South India run on one of two models, and the tax treatment differs.
Comparison
Own-Account Farm vs Contract Grower
| Question | Own-account farm | Contract grower (integration) |
|---|---|---|
| Who owns chicks, feed and medicine? | You | The integrator |
| What you receive | Sale price of birds or eggs | Growing charge per kg or per bird |
| GST on what you receive | Nil (live poultry, eggs: Notif 10/2025-CT(R)) | Nil, job work in rearing animals for food (Notif 12/2017-CT(R), S. No. 55) |
| Turnover for income tax | Full sale value | Growing charges only |
| Section 44AD available? | Yes, within Rs 2 crore / Rs 3 crore | Yes, on growing charges |
Source: Notification 10/2025-CT(R); Notification 12/2017-CT(R), S. No. 55; Section 44AD, Income-tax Act 1961
S. No. 55 exempts "carrying out an intermediate production process as job work in relation to... rearing of all life forms of animals, except the rearing of horses, for food". When the integrator owns the birds and you rear them in your shed, that's job work on their goods. Keep the integration agreement and the batch settlement sheets, because they show the birds were never yours.
On the income tax side, a contract grower's turnover is only the growing charges. Say a grower with two sheds receives Rs 24,00,000 in growing charges in FY 2025-26, all by bank transfer. Under Section 44AD, deemed profit is 6% of Rs 24,00,000 = Rs 1,44,000. That's below the Rs 4 lakh nil slab of the new regime, so no tax is payable. If your integrator deducts TDS on the growing charges, it shows in Form 26AS and AIS. File a return to claim it back, because a refund only comes through a return.
Income tax: why poultry 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. The Act adds one deeming rule for saplings and seedlings grown in a nursery (Explanation 3), and none for poultry, dairy or fisheries.
So a farmer who grows paddy and also runs a broiler shed has two incomes. The paddy income is agricultural income, exempt under Section 10(1) but used for rate purposes (see our agricultural income guide). The poultry income is business income under "Profits and gains of business or profession", fully taxable.
Section 44AD for own-account farms. 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 (Section 44AD, as amended by Finance Act 2023). No books of account are needed for that business, and you file ITR-4 if total income is within Rs 50 lakh and the other conditions are met.
Example (broiler farm, proprietor, new tax regime, FY 2025-26): sales of Rs 1,50,00,000, of which Rs 20,00,000 was collected in cash from local traders. Cash is 13.3% of turnover, so the Rs 2 crore limit applies, and Rs 1.5 crore is within it.
- 6% of Rs 1,30,00,000 (bank and UPI) = Rs 7,80,000.
- 8% of Rs 20,00,000 (cash) = Rs 1,60,000.
- Deemed profit: Rs 9,40,000.
- Tax: Rs 4-8 lakh at 5% = Rs 20,000; Rs 8-9.4 lakh at 10% = Rs 14,000. Total Rs 34,000.
- Income is within Rs 12 lakh, so the Section 87A rebate of up to Rs 60,000 covers it. Tax payable: nil.
If the same farm had Rs 50 lakh of cash sales instead of Rs 20 lakh, deemed profit would rise by 2% of Rs 30 lakh, or Rs 60,000. Getting traders to pay by UPI or bank transfer directly lowers the presumptive figure.
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 bad year hits. Bird flu culls and price crashes 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, Section 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 and big buyers: three rules to know
Cash from traders. 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. A trader lifting a full shed of broilers worth Rs 3.2 lakh and paying cash on the spot breaks this rule, and Section 271DA sets the penalty at Rs 3.2 lakh, the full amount. Take it 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. Paying a feed or chick dealer Rs 60,000 in cash puts that purchase at risk. Rule 6DD of the Income-tax Rules 1962 carves out purchases of the produce of poultry farming made directly from the producer, which matters for the trader buying your birds, not for your purchases from dealers. See our Section 40A(3) guide.
TDS by processors. A processor or retail chain 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. It applies to exempt goods like live birds and eggs too. Check Form 26AS or AIS and claim the credit. See our Section 194Q guide.
Common mistakes poultry farmers make
- Treating poultry income as agricultural income. It isn't, under Section 2(1A). Not filing a return 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. The right basis for a poultry farm is that it supplies only exempt goods (Section 23(1)(a)), and that stops working the day you add a taxable product.
- Leaving egg and bird sales out of aggregate turnover. Once you sell anything taxable, exempt sales count toward the registration limit.
- Taking big cash payments from traders. Rs 2 lakh or more from one trader in a day triggers a penalty equal to the amount.
- Missing the return deadline for refunds. The original due date for AY 2026-27 non-audit returns was 31 July 2026. 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 poultry 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 actual profit, especially after a loss-making batch, and file through our ITR filing service. If you keep books for a larger farm, our accounting and bookkeeping service handles the ledgers. See pricing for plans.
