GST Rate for Biodegradable Bags: Rajasthan Advance Ruling RAJ/AAR/2025-26/15
The Authority for Advance Ruling confirmed that biodegradable bags fall under Chapter 39, but the 5% GST rate depends on proving actual biodegradability.
- Ruling
- RAJ/AAR/2025-26/15, dated 17.12.2025
- Dated
- 17 Dec 2025
- 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
- Easy Flux Polymers asked for the HSN classification of their biodegradable bags.
- The Authority classified the bags under HSN 3923 29 90.
- A 5% GST rate applies only if the bags are truly biodegradable.
- The Authority will not verify or certify the technical biodegradability of products.
In short
The company asked the Authority for Advance Ruling (AAR) to confirm the GST classification and tax rate for their biodegradable bags. They wanted to know if these bags qualify for the lower 5% GST rate introduced in September 2025. The core issue was whether the bags are treated as plastic goods or as special biodegradable items under the tax law.
What has changed
How it worked before
Businesses were often unsure if their compostable or biodegradable bags qualified for concessional tax rates, as the classification between plastic and paper-based goods was frequently debated.
What has changed
The Authority ruled that these bags fall under Chapter 39 (plastic-based goods) and specifically HSN 3923 29 90. While a 5% GST rate is available for biodegradable bags, the ruling clarifies that the tax office will not verify if your product is actually biodegradable. You must hold valid technical proof to claim this lower rate.
Who this affects
Manufacturers and suppliers of biodegradable, compostable, or eco-friendly carry bags.
An example
Imagine a company, GreenPack Solutions, that makes corn-starch-based bags. They want to apply the 5% GST rate. Based on this ruling, they cannot simply label their bags as biodegradable to get the tax break. They must ensure they have independent lab reports proving the bags meet the legal definition of biodegradable, as the tax department will not perform these tests themselves.
What you should do
An advance ruling only applies to the business that requested it and their specific tax officer. If you sell similar bags, do not assume this 5% rate applies to you automatically. You should maintain rigorous technical certifications for your products to justify the 5% rate if your local tax officer audits your classification.
If you do nothing
If you apply the 5% rate without sufficient proof of biodegradability, your local tax officer may reclassify your goods as standard plastic bags. This could lead to a demand for the difference in tax, plus interest and potential penalties for incorrect filing. You risk a long legal dispute if you cannot prove your product meets the specific criteria of the notification.
The terms explained
- HSN
- Harmonized System of Nomenclature is a code used to classify goods for tax purposes so that every product has a standard category.
- Advance Ruling
- A formal decision from the tax authority on how GST laws apply to a specific business situation.
- Chapter 39
- A section of the GST tariff schedule that covers plastics and articles made from plastic materials.
The ruling in detail
Authority for Advance Ruling
M/s Easy Flux Polymers Private Limited
RAJ/AAR/2025-26/15, dated 17.12.2025 · Rajasthan
Questions before the authority
- Whether the Applicant's biodegradable bags are classifiable under Chapter 39 (if of plastic/compostable polymer) or Chapter 48 (if of paper), and the appropriate HSN therein.
- Whether supplies of the said biodegradable bags are covered by the entry 'Paper Sacks/Bags and bio-degradable bags' (Ch. 39, 48) in Schedule I of Notification 9/2025-CTR, attracting 5% GST (2.5% CGST + 2.5% SGST), w.e.f. 22-Sep-2025.
Facts
The applicant manufactures and supplies biodegradable/compostable bags and seeks clarification on their classification and applicable GST rate. They contend that their products are covered under the specific entry for biodegradable bags in Schedule I of the relevant notification. The applicant relies on certifications to support the claim that their products are environmentally friendly substitutes for plastic carry bags.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification/HSN | Chapter 39, Heading 3923, sub-heading 3923 29 90 Classification is independent of whether the material is biodegradable |
| Applicability of 5% GST rate | Applicable only if the goods are biodegradable If not biodegradable, the general classification for plastic bags under Chapter 39 applies |
The Authority held that the bags are classifiable under Chapter 39, specifically heading 3923, sub-heading 3923 29 90. Regarding the tax rate, it ruled that the 5% concessional rate applies only if the goods supplied are indeed biodegradable as understood in the context of the notification. The Authority explicitly stated it does not possess the jurisdiction to verify or certify the actual biodegradability or compostability of the applicant's products.
Reasoning
The Authority determined that the bags are made of polymer materials and fall under Chapter 39, specifically heading 3923 for articles of conveyance or packing. It noted that while Notification No. 9/2025-Central Tax (Rate) provides a concessional 5% rate for biodegradable bags, this benefit is conditional upon the goods being biodegradable. The Authority clarified that it is not the competent body to verify environmental or technical standards of biodegradability. Therefore, it ruled that the concessional rate applies only if the goods meet the definition of biodegradable as intended by the notification.
Provisions relied on
- Section 97(2) of the CGST/RGST Act, 2017
- Notification No. 9/2025-Central Tax (Rate) dated 17.09.2025
For the practitioner
This ruling confirms that the **concessional 5% GST rate** for biodegradable bags is strictly conditional on the product's actual biodegradability. Practitioners should note that the AAR will **not verify technical claims** regarding compostability, meaning the burden of proof remains with the taxpayer to substantiate their product's environmental status. It settles the HSN classification for such plastic-based bags under 3923 29 90.
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/1-order_easy_flux_polymers.pdf
Legibility of the scan, as read: high.
Prepared 12-10-2026.
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