GST Rate on Paper Bags: Rajasthan Advance Ruling RAJ/AAR/2025-26/16
The Rajasthan Authority for Advance Ruling decided that standard paper bags are subject to 18% GST, not the 5% rate.
- Ruling
- RAJ/AAR/2025-26/16, 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
- SGS Packaging asked if their paper bags qualify for a 5% GST rate.
- The authority ruled the bags do not meet the criteria for 5% GST.
- Paper bags are classified under a residual category attracting 18% GST.
In short
The company asked the Rajasthan Authority for Advance Ruling (AAR) to confirm if their paper bags qualify for a lower 5% Goods and Services Tax (GST) rate. The authority found that the lower rate only applies to specific biodegradable bags, which the company did not prove their products to be. Consequently, the bags fall into a general category that carries an 18% GST rate.
What has changed
How it worked before
Many businesses assumed that most paper-based packaging products might qualify for lower tax rates intended for environmentally friendly or specific paper goods.
What has changed
The authority clarified that without proof of being biodegradable, paper bags fall under the residual category of Heading 4819. This means manufacturers must apply the 18% GST rate rather than the 5% rate.
Who this affects
Manufacturers and suppliers of paper bags who are unsure about their GST classification.
An example
A paper bag manufacturer in another state believes their product qualifies for the 5% rate. They should not automatically apply this rate based on the SGS Packaging ruling. Instead, they must verify if their specific bags meet the legal definition of biodegradable. If they remain unsure, they should consult a tax professional or seek their own ruling.
What you should do
If you manufacture paper bags, review your product specifications against the notification criteria. Remember that an advance ruling only binds the company that asked and its specific tax officer; it is not a general law for all businesses.
If you do nothing
If you apply the 5% rate without meeting the specific criteria, a tax officer may view this as underpayment of tax. You could face demands for the unpaid 13% difference, along with interest and potential penalties for incorrect classification.
The terms explained
- Advance Ruling
- A formal decision provided by tax authorities to a specific business regarding how tax laws apply to their particular situation.
- Residual Category
- A catch-all classification used for items that do not fit into more specific, defined categories in the tax tariff.
- Heading 4819
- A specific classification code under the Customs Tariff Act used for cartons, boxes, and bags made of paper or paperboard.
The ruling in detail
Authority for Advance Ruling
M/s SGS PACKAGING PRIVATE LIMITED
RAJ/AAR/2025-26/16, dated 17.12.2025 · Rajasthan
Questions before the authority
- Whether Paper Bags manufactured and supplied by the Applicant, classifiable under Heading 4819 of the Customs Tariff Act, 1975, are covered under Entry No. 319 of Schedule I to Notification No. 09/2025-Central Tax (Rate), attracting GST @ 5%
- Whether Paper Bags manufactured and supplied by the Applicant, classifiable under Heading 4819 of the Customs Tariff Act, 1975, are covered under Entry No. 185 of Schedule II to the said Notification, attracting GST @ 18%
Facts
The applicant is engaged in the manufacture and supply of paper bags for packaging purposes. They sought an advance ruling to determine the correct GST classification and applicable tax rate for their products, specifically whether they fall under the 5% rate slab or the 18% rate slab.
Ruling
| Question | What the authority ruled |
|---|---|
| Coverage under Entry No. 319 of Schedule I (5% GST) | No The product does not qualify as a biodegradable bag under this entry. |
| Coverage under Entry No. 185 of Schedule II (18% GST) | Yes The product falls under the residual category of Heading 4819. |
The authority ruled that the applicant's paper bags are not covered under Entry No. 319 of Schedule I. Instead, they are appropriately classifiable under Entry No. 185 of Schedule II of Notification No. 09/2025-Central Tax (Rate), attracting GST at the rate of 18%.
Reasoning
The authority reasoned that Entry No. 319 of Schedule I is restricted to biodegradable bags, and the applicant failed to provide evidence that their products meet this specific criteria. Since the paper bags are not corrugated or non-corrugated cartons or boxes, they do not fall under the specific entries for those items. Consequently, the products fall under the **residual category** of Heading 4819, which is covered by Entry No. 185 of Schedule II. The ruling relied on the interpretation of Notification No. 09/2025-Central Tax (Rate) and the Customs Tariff Act, 1975.
Provisions relied on
- Section 97(2) of the CGST/RGST Act, 2017
- Notification No. 09/2025-Central Tax (Rate)
- Heading 4819 of the Customs Tariff Act, 1975
For the practitioner
This ruling clarifies that standard paper bags, absent proof of being biodegradable, are subject to **18% GST** under the residual entry for Heading 4819. It serves as a warning that taxpayers cannot claim the lower 5% rate for biodegradable goods without substantiating the specific nature of their products. It does not provide relief for manufacturers of non-biodegradable paper 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/2-order_sgs_packaging.pdf
Legibility of the scan, as read: high.
Prepared 12-10-2026.
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