GST 2.0 is a tailwind for India’s Nutraceuticals

The 56th GST Council has recommended a simplified structure with two principal slabs—5% and 18%, plus a 40% “demerit” slab for select goods. The Council has also set 22 September 2025 as the go-live date for rate changes on services and on most goods (with tobacco/pan masala items transitioning later). This is not conjecture; it’s in the Council’s official press release and annexures.

Most retail nutraceuticals sold as foods sit under Chapter 21, HSN 2106 (“Food preparations not elsewhere specified or included”). The Council’s annexure explicitly moves “Food preparations not elsewhere specified or included” to 5% (from 18%). That captures a large share of powders, blends, gummies, bars, sachets, and other FSSAI-licensed preparations—e.g., a protein powder with sucralose remains a 5% good when supplied as a powder under 2106. Diabetic foods (2106 90 91) also move to 5%.

A second pathway exists for products licensed and positioned as medicaments (Chapter 30). The Council and multiple advisories confirm “all other drugs & medicines” at 5% (with specific lifesaving therapies at nil), which means medicament-classified nutra/medical-nutrition products will also sit at 5%. Classification must be defensible—this is about licensing, claims, and presentation—not just dosage form.

The annexure draws a bright line around beverages. It places “Other non-alcoholic beverages” (2202 91/99) in the 40% slab, while explicitly carving plant-based milk drinks, soya milk drinks, fruit-pulp/fruit-juice-based drinks, and beverages containing milk into 5%. For nutraceuticals, the implication is unambiguous: RTD electrolyte/energy/nootropic drinks that do not qualify under the 5% carve-outs risk being taxed at 40%. Your formulation, ingredient basis, and label language now directly determine rate.

First, job-work services for Chapter 30 goods (pharmaceutical products) have been cut from 12% to 5%. If you toll-manufacture medicament-classified SKUs, your outsourced conversion costs drop immediately, improving landed COGS.

Second, the Council has endorsed risk-based provisional refunds and has signalled provisional sanctioning for inverted-duty refunds (IDS) via amendment to section 54(6). That matters because many nutraceutical SKUs will sell at 5% while inputs (vitamins, amino acids, flavours, packaging) often stay at 18%, creating ITC accumulation. A risk-based, faster refund track helps keep working capital liquid as you recalibrate pricing and procurement.

A practical playbook for CXOs

1. Re-validate HSN per SKU. Decide—2106 food vs Chapter 30 medicament—based on license, claims, and presentation. Build a defensible memo for each high-volume SKU.

2. Engineer beverages to 5%. If you plan to launch RTDs, design into plant/fruit/milk-based definitions; otherwise model a 40% tax scenario and rethink unit economics.

3. Reprice with documentation. Craft a SKU-wise pass-through plan that reflects rate drops and protects margins on inputs that remain at 18%.

4. Model ITC and refunds. Quantify IDS exposure, ready the paperwork for risk-based provisional refunds, and align your ERP/tax masters ahead of 22 Sept 2025.

5. Revisit make-vs-buy. The 5% job-work rate for Chapter 30 neutralises a chunk of tolling friction; consider hybrid networks (in-house for core, CMO for surge).

Where AI can accelerate wins (and reduce execution risk)
Across our work at Nutrify Today, we see the companies that move fastest are the ones that pair tax clarity with design-to-rate product strategy and they do it with modern tooling. This is precisely where NutrifyGenie AI is built to help:

·Deep-science supplement innovation: turn hypotheses into defendable, evidence-stacked formulations that meet business and regulatory constraints.

·Ingredient & formulation re-engineering: extend product-market story and lifecycle with solid science—crucial when migrating SKUs into 2106 or Chapter 30 lanes.

·Same-day BOM estimation: compress development cycles; see cost and tax sensitivity early, not after stability runs.

·Techno-marketing dossiers: equip sales/KAM/medical teams with clinical scaffolding and label-claim guardrails for the new GST era.

·Multi-country regulatory checklists & application management: ship the right dossier, to the right agency, first time.

·Supply-chain & CMO mapping across 13 countries: source scouting, diligence, capacity/COGS benchmarking, and dual-sourcing strategies that withstand rate and input shocks.

·Onsite production management: sustained GC management and quality control from pilot to scale.

GST 2.0 is a once-in-a-decade affordability and scale lever for nutraceuticals. Most powders, blends, and foods fall to 5%; medicaments move to 5%; well-designed RTDs can be 5%—but misclassified beverages could face 40%. With go-live on 22 September 2025, the winners will nail classification, reformulate where needed, and operationalise refunds, pricing, and supply quickly—ideally with AI-driven science, regulatory, and supply-chain muscle to make every week count.