Looking for expert help with Rubber 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
- Natural rubber (HSN 4001) in primary forms, plates, sheets or strip is 5% GST (Notification 9/2025-CT(R), Schedule I, S. No. 266).
- No reverse charge applies when a registered dealer buys rubber from growers. Natural rubber isn't in Notification 4/2017-CT(R).
- Synthetic (4002), reclaimed (4003) and compounded rubber (4005) are 18%. Soft rubber scrap (4004 00 00) is 5%.
- An individual or HUF grower who is an agriculturist isn't liable to register for produce out of cultivation (Section 23(1)(b), CGST Act).
- Estates that make latex concentrate, crepe or block rubber from their own latex pay income tax on 35% of that income (Rule 7A, 1962 Rules; Rule 271, Rules 2026).
What is the GST rate and HSN code for natural rubber? Natural rubber falls under HSN 4001 and attracts 5% GST (2.5% CGST plus 2.5% SGST, or 5% IGST inter-State) under Schedule I, S. No. 266 of Notification 9/2025-Central Tax (Rate), in force from 22 September 2025. Synthetic, reclaimed and compounded rubber are 18%. Natural rubber isn't under reverse charge, so dealers buying from growers pay no GST on purchase.
Rubber changes hands three or four times before it reaches a tyre factory. A smallholder taps the trees and sells field latex or smoked sheets. A village dealer collects sheets from dozens of holdings, grades them and sells in bulk. A processor or a large estate turns latex into concentrate, crepe or block rubber. Each of them has a different GST and income tax position. This post covers GST rates, registration, input credit, e-way bills and income tax for FY 2025-26 (AY 2026-27) under the Income-tax Act 1961, with the Income-tax Act 2025 and Rules 2026 provisions that apply from 1 April 2026. It's written for growers, rubber dealers, processors and the CAs who file for them in Kerala, Tripura, Karnataka and beyond. If you also grow coffee or tea, see our coffee planters guide and tea estates guide.
What GST rate applies to rubber and the things you buy?
Natural rubber has been 5% since GST began, and the rate didn't change when Notification 9/2025-Central Tax (Rate) replaced the 2017 schedules on 22 September 2025. What matters is whether the rubber is natural or synthetic, and whether scrap has been ground.
Tax Rate Chart
GST on Rubber and Related Goods (from 22 September 2025)
Natural rubber in primary forms or in plates, sheets or strip (4001)
Schedule I, S. No. 266
Waste, parings or scrap of rubber, other than hard rubber (4004 00 00)
Schedule I, S. No. 267
Waste or scrap of hard rubber (4017)
Schedule I, S. No. 277
Hand operated rubber roller (8420)
Schedule I, S. No. 429
Synthetic rubber and mixtures with natural rubber (4002)
Schedule II, S. No. 128
Reclaimed rubber (4003)
Schedule II, S. No. 129
Powders and granules made from rubber scrap (4004)
Schedule II, S. No. 130
Compounded rubber, unvulcanised (4005)
Schedule II, S. No. 131
Source: CBIC Notification 9/2025-Central Tax (Rate), 17 September 2025, in force 22 September 2025, as amended up to 01/2026-CT(R)
One entry covers the natural rubber trade. The 5% entry reads "Natural rubber, balata, gutta-percha, guayule, chicle and similar natural gums, in primary forms or in plates, sheets or strip". It sits at the heading level, so you don't need a separate rate for each grade of sheet you deal in.
Watch the mixtures. Heading 4002 includes mixtures of natural rubber with synthetic rubber. A processor who blends the two and sells the blend in primary form is selling an 18% product, even if most of it is natural rubber.
Scrap dealers, check the form. Rubber scrap and parings are 5%. Once you grind them into crumb, powder or granules, the same material is 18% under Schedule II, S. No. 130. Our scrap dealers guide covers the rest of that trade, and our tyre retreading guide covers tread rubber buyers.
Sheet rollers. Hand operated rubber rollers are 5%. The entry names hand-operated rollers only, so don't assume a powered sheeting machine is 5% without checking its own entry.
Who needs GST registration in the rubber trade?
Small growers. Section 2(7) of the CGST Act defines an agriculturist as an individual or Hindu Undivided Family (HUF) who cultivates land by their own labour, family labour, or hired labour under personal or family supervision. Section 23(1)(b) says an agriculturist isn't liable to register "to the extent of supply of produce out of cultivation of land". A smallholder selling latex or sheets from their own trees fits this. If you also process other people's latex or trade bought sheets, that part of the business doesn't.
Estates run by companies, firms and LLPs. The agriculturist definition covers only individuals and HUFs. A company or partnership estate looks at the normal limits like any other supplier.
Dealers and processors. The Rs 40 lakh limit for businesses that supply only goods comes from Notification 10/2019-Central Tax. It doesn't apply to intra-State suppliers in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand, where the Section 22(1) limits apply instead. Kerala and Karnataka aren't on that list. Most natural rubber ends up with tyre and product makers, and many of them are in other States. Section 24 requires registration from your first inter-State sale, whatever your turnover. Our registration limit guide has the detail, and our GST registration service files the application.
Composition. Rubber isn't on the barred list in Notification 14/2019-Central Tax, which names only ice cream, pan masala and tobacco. A dealer with last-year turnover up to Rs 1.5 crore can pay 0.5% CGST plus 0.5% SGST on taxable turnover under Rule 7 of the CGST Rules. But Section 10(2)(c) bars any inter-State sale, so a dealer supplying a factory in another State can't use it. Our composition scheme guide lists the other conditions.
Rubber dealers: why your GST is mostly paid in cash
Here's the part that surprises new dealers. Because natural rubber isn't under reverse charge, you pay no GST when you buy sheets from an unregistered grower. But that also means you have no input tax credit on those purchases. You charge 5% on the full sale value and pay most of it in cash.
Example: a registered dealer in Kerala buys sheets worth Rs 25,00,000 in a month from unregistered growers (no GST) and Rs 5,00,000 from a registered dealer (plus Rs 25,000 GST at 5%). It sells the whole lot to a factory in the same State for Rs 32,00,000.
| Item | Amount |
|---|---|
| Output tax on sales (5% of Rs 32,00,000) | Rs 1,60,000 |
| Split as CGST plus SGST | Rs 80,000 + Rs 80,000 |
| Credit on purchases from unregistered growers | Nil |
| Credit on purchases from the registered dealer | Rs 25,000 |
| GST payable in cash | Rs 1,35,000 |
If the factory were in another State, the same Rs 1,60,000 would be charged as IGST at 5%. Either way, price your margin after GST. A dealer who quotes a buyer "Rs 32 lakh inclusive" when the cost base has no credit has given away most of a month's profit.
E-way bills on collection. Rule 138(1) of the CGST Rules requires an e-way bill when a registered person causes movement of goods worth more than Rs 50,000, including movement "due to inward supply from an unregistered person". When an unregistered grower supplies a registered dealer and the dealer is known when the goods leave, the movement is treated as caused by the dealer. So if your lorry collects Rs 80,000 of sheets from a grower's holding, you generate the e-way bill, not the grower. Our e-way bill guide walks through the portal.
Step-by-Step Guide
Setting Up GST for a Rubber Dealer or Processor
Map your HSN codes
Natural rubber 4001 at 5%; soft rubber scrap 4004 00 00 at 5%; crumb and granules from scrap 18%; synthetic 4002, reclaimed 4003 and compounded 4005 rubber 18%.
Check registration
Register above Rs 40 lakh of goods turnover in States that allow it, at the Section 22 limit in excluded States such as Tripura, or from your first inter-State sale.
Record grower purchases
Keep a purchase register with each grower's name, village, weight, grade and payment mode. No GST is paid on these and no credit arises.
Generate e-way bills on collection
Collections from unregistered growers above Rs 50,000 need an e-way bill from you as the registered recipient (Rule 138(1)(iii)).
File returns and pay in cash
Report sales in GSTR-1 and pay the net 5% through GSTR-3B. Expect little credit unless you buy from registered dealers.
Source: Notifications 9/2025-CT(R), 4/2017-CT(R), 10/2019-CT and 14/2019-CT; CGST Act Sections 2(7), 10, 22, 23 and 24; CGST Rules 7 and 138
Tapping and farm labour. Notification 12/2017-Central Tax (Rate), S. No. 54 exempts services relating to cultivation of plants by way of agricultural operations directly related to production of agricultural produce, including harvesting, and supply of farm labour. A labour contractor supplying tappers to work on an estate falls under this entry. A contractor who also collects latex and makes sheets at its own off-farm unit should take advice, because S. No. 54(c) covers processes carried out at an agricultural farm.
Income tax for rubber growers and estates: the 35% rule
The rule. Income from the sale of centrifuged latex or cenex, latex-based crepes (such as pale latex crepe), brown crepes (such as estate brown crepe, remilled crepe, smoked blanket crepe or flat bark crepe) or technically specified block rubbers, made from field latex or coagulum from rubber plants grown by the seller in India, is computed as business income and 35% of it is taxable. For FY 2025-26 this is Rule 7A(1) of the Income-tax Rules 1962. From 1 April 2026 it's Rule 271(1), Table Sl. No. 1 of the Income-tax Rules 2026, at the same 35%.
Example: an estate's FY 2025-26 profit from block rubber made from its own latex, computed as business income, is Rs 50,00,000.
| Share | Percentage | Amount |
|---|---|---|
| Taxable business income | 35% | Rs 17,50,000 |
| Agricultural income | 65% | Rs 32,50,000 |
For an individual or HUF, the agricultural part isn't taxed directly but can push the taxable part into a higher slab under partial integration. Our agricultural income guide shows that calculation.
Smoked sheets and field latex aren't in the list. Rule 7A and Rule 271 name specific processed products. Ribbed smoked sheets aren't one of them. A grower who sells field latex as it comes from the tree is selling produce in its raw state. A grower who makes sheets on the holding relies on the general definition: income from a process ordinarily employed by a cultivator to render the produce fit to be taken to market is agricultural income (Section 2(1A)(b)(ii) of the 1961 Act; Section 2(5)(b)(ii) of the 2025 Act). Neither Act says whether sheeting meets that test, so settle the position with your CA and apply it the same way every year.
Bought latex isn't covered. The 35% rule applies only to latex from plants the seller grew. A processor that buys field latex from neighbouring holdings earns ordinary business income on that share, taxed in full. The rules give no allocation method for a mixed factory, so record own-estate and bought latex separately from the day it arrives.
Replanting. You can deduct the cost of planting rubber plants to replace plants that have died or become permanently useless in an area already planted, if the area hasn't been abandoned (Rule 7A(2); Rule 271(2)). A Rubber Board replanting subsidy that's exempt from tax isn't deducted from that cost. The subsidy exemption is Section 10(31) of the 1961 Act and Schedule III, Table Sl. No. 21 of the 2025 Act, for a scheme notified by the Central Government.
Rubber development account. A business that grows and manufactures rubber in India can deduct money deposited in a NABARD special account under a Rubber Board scheme, or in a Rubber Board deposit account. The deduction is the amount deposited or 40% of the business profit before this deduction, whichever is less. Deposit within six months of the year end, or by the return due date if that's earlier, and get the accounts audited. It's Section 33AB of the 1961 Act for FY 2025-26 and Section 48 with Schedule IX of the 2025 Act from 1 April 2026. For a firm, the deduction isn't allowed again in the partners' hands.
Income tax for rubber dealers
Section 44AD. For FY 2025-26, a resident individual, HUF or partnership firm (not an LLP) can declare 6% of turnover received by bank transfer, UPI or account payee cheque (by the return due date) and 8% of the rest as profit under Section 44AD of the Income-tax Act 1961. The limit is Rs 2 crore of turnover, or Rs 3 crore if cash receipts are within 5% of turnover. From 1 April 2026 it's Section 58(2), Table Sl. No. 1 of the Income-tax Act 2025.
Example: a proprietor dealer's FY 2025-26 turnover is Rs 1,80,00,000, all received by bank transfer from factories. Deemed profit under 44AD is 6% of Rs 1,80,00,000, so Rs 10,80,000. Sheet trading margins are often thinner than 6%, so compare with your books before you opt in. If you opt in and then leave the scheme within five years, Section 44AD(4) keeps you out for the next five. Our Section 44AD guide explains the lock-out.
Paying growers in cash. A business expense paid in cash above Rs 10,000 to one person in a day is normally disallowed (Section 40A(3) of the 1961 Act; Section 36(4) of the 2025 Act). Payments for agricultural or forest produce made to the cultivator, grower or producer are an exception: Rule 6DD(e) of the 1962 Rules for FY 2025-26 and Rule 26(1)(e) of the Rules 2026 from 1 April 2026. A dealer paying a smallholder Rs 40,000 in cash for sheets from their own trees can rely on it. The same payment to a sub-agent who collected the sheets can't. Keep each grower's name, holding and a signed weighment slip.
Cash the grower receives. Under Section 269ST of the 1961 Act (Section 186 of the 2025 Act), no one may receive Rs 2,00,000 or more in cash from one person in a day, for one transaction, or for one event. A dealer paying Rs 2,40,000 in cash for one lot puts the grower in breach, and the penalty equals the amount received (Section 271DA; Section 451 of the 2025 Act). Our cash transaction limits guide covers both sides.
Common mistakes in the rubber trade
- Paying reverse charge on grower purchases. Natural rubber isn't in Notification 4/2017-CT(R). Paying it adds cost and creates mismatched returns.
- Quoting GST-inclusive prices without credit. Purchases from unregistered growers carry no credit, so the 5% comes out of your margin if you don't add it.
- Billing crumb at the scrap rate. Scrap is 5%, but powder and granules from it are 18%.
- Applying the 35% rule to sheets or bought latex. The rule lists specific products made from latex the seller grew.
- Skipping e-way bills on farm collections. The registered dealer generates them for loads above Rs 50,000.
- Paying sub-agents in cash. The Rule 6DD(e) exception covers the grower, not a middleman.
How Tax Garden helps rubber businesses
We register your dealership or processing unit, map your HSN codes, keep your grower purchase register and e-way bills in order, and file GSTR-1 and GSTR-3B through our GST return filing service. For estates, we separate own-crop and bought latex, work out the 35% split and the rubber development deduction, and file your ITR through our ITR filing service. Our accounting and bookkeeping service tracks cash payments to growers through the year. Call or WhatsApp us on 9640290977.
Related reading: GST and income tax for cashew processing units, GST and income tax for spice traders, GST on job work and the item-wise GST rates list.
