GST Rate on Paper Bags: Gujarat Advance Ruling GUJ/GAAR/R/2026/24
The Gujarat Authority for Advance Ruling confirmed that paper bags now attract a lower 5% GST rate.
- Ruling
- GUJ/GAAR/R/2026/24, dated 03/07/2026
- Dated
- 03 Jul 2026
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Canpac Trends asked if paper bags attract 18% or 5% GST.
- The authority ruled that paper bags fall under the 5% tax bracket.
- This decision supports the use of eco-friendly paper packaging.
In short
The company asked whether their paper bags should be taxed at 18% as general packaging or at 5% under a newer, specific category for paper sacks and bags. The authority decided that the 5% rate applies to encourage the use of sustainable, non-plastic alternatives.
What has changed
How it worked before
Businesses were uncertain whether paper bags should be taxed under the general 18% rate for paper containers or the lower 5% rate intended for eco-friendly packaging.
What has changed
The authority clarified that the specific entry for paper bags in the 2025 notification takes priority over general packaging rules. This means manufacturers can now apply the 5% GST rate to these products.
Who this affects
Manufacturers and suppliers of paper bags and eco-friendly packaging materials.
An example
Imagine a business called GreenPack that makes paper shopping bags. They were previously charging 18% GST because they were unsure if the 5% rule applied to their specific design. Based on this ruling, GreenPack can now confidently apply the 5% rate, provided their products meet the same criteria as those described in the ruling.
What you should do
If you manufacture paper bags, you may consider applying the 5% rate. However, remember that an advance ruling only binds the company that asked and its specific tax office; it is not a universal law for all businesses.
If you do nothing
If you apply the 5% rate without confirming your product matches the ruling's criteria, a tax officer may disagree and demand the 18% rate. You would then be liable for the tax difference, plus interest and potential penalties for underpayment.
The terms explained
- Advance Ruling
- A formal decision from tax authorities on how GST laws apply to a specific business situation.
- Heading 4819
- A specific category in the tax tariff system used to classify paper-based packaging like cartons and bags.
- Schedule I
- A list of goods in the GST law that are taxed at the lowest rate, currently 5%.
The ruling in detail
Authority for Advance Ruling
M/s. Canpac Trends Private Limited
GUJ/GAAR/R/2026/24, dated 03/07/2026 · Gujarat
Questions before the authority
- Whether the supply of 'Paper Bags' made out of paper or paper board, classifiable under Heading 4819 and more specifically under Tariff Item 48194000, is liable to GST at the rate of 18% under Entry No. 185 of Schedule II to Notification No. 01/2017-Central Tax (Rate), as amended, or whether the same could fall under the general and residual entry No. 319 of Schedule I (5%) inserted vide Notification No. 09/2025-Central Tax (Rate) dated 17.09.2025.
Facts
The applicant is engaged in the manufacture and supply of paper-based packaging products, including paper bags, mono cartons, and trays. They sought an advance ruling to determine the correct GST classification and applicable tax rate for their paper bags, specifically whether they attract 18% GST under Entry 185 or 5% GST under the newly inserted Entry 319.
Ruling
| Question | What the authority ruled |
|---|---|
| Paper Bags (HSN 48194000) | 5% GST Covered under Entry No. 319 of Schedule I |
The Authority ruled that the applicant's paper bags are covered under Entry No. 319 of Schedule I of Notification No. 09/2025-Central Tax (Rate). Consequently, the supply of these paper bags is liable to GST at the **concessional rate of 5%**.
Reasoning
The Authority examined the legislative intent behind the insertion of Entry 319, which was to promote eco-friendly alternatives to plastic bags. They concluded that this specific entry, covering paper sacks/bags and biodegradable bags, takes precedence over the general entry for packing containers under Heading 4819. The ruling relied on the interpretation of Notification No. 09/2025-Central Tax (Rate) and the **specific inclusion of paper sacks/bags** in the 5% tax bracket to encourage environmental sustainability.
Provisions relied on
- Section 97(2)(b) of the CGST/GGST Act, 2017
- Notification No. 01/2017-Central Tax (Rate)
- Notification No. 09/2025-Central Tax (Rate)
- Heading 4819 of the Customs Tariff Act, 1975
For the practitioner
This ruling provides clarity for manufacturers of paper bags by confirming they qualify for the **reduced 5% GST rate** under the newer notification. It settles the conflict between the residual entry for paper sacks/bags and the general entry for packing containers. Practitioners should note that this decision is specific to the interpretation of the 2025 notification and its intent to favor eco-friendly packaging.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/24_canpac_trends_pvt_ltd_0001_gujarat_1.pdf
Legibility of the scan, as read: high.
Prepared 10-09-2026.
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