Authority for Advance Rulings sets 5 percent Goods and Services Tax on Kraft paper bags

The Authority for Advance Rulings issued an order clarifying that Kraft paper bags manufactured using Kraft paper and adhesive gum fall under Entry 1 of Schedule I to Notification No. 9/2025-Central Tax (Rate), attracting a 5 percent Goods and Services Tax rate. The ruling specifies that businesses can claim input tax credit provided they satisfy the conditions outlined in Section 16 of the governing statute. Advance rulings provide binding clarity on tax classifications and rate applications for specific commercial products, resolving ambiguities that arise during routine manufacturing and supply operations.

Previously, taxpayers faced uncertainty regarding exact tariff schedules for specialized paper products, but structured advance rulings establish clear compliance baselines for similar commercial operations. Tax professionals and manufacturers must verify their billing software and invoice classifications to reflect the 5 percent Goods and Services Tax rate under Notification No. 9/2025-Central Tax (Rate). Businesses need to audit their supplier documentation to ensure all prerequisites under Section 16 are fully satisfied before claiming input tax credit.

Proper compliance documentation protects companies from future tax disputes and penalty liabilities.