AAR Clarifies Classification of “Toilet Soaps” and Applicable GST Rates

The applicant, M/s Tarwani Soap Industries, based in Raipur, Chhattisgarh, is a manufacturer of various types of soaps. The applicant sought an advance ruling regarding the guiding principles for determining the definition of “toilet soap” under HSN 3401. This clarification was specifically sought in light of Schedule I, Entry No. 251 of Notification No. 9/2025-Central Tax (Rate), which prescribes a 5% GST rate for “Toilet soaps,” as opposed to the higher 18% rate generally applicable to other soaps used for household or laundry purposes. The applicant sought to understand if their products, manufactured in the form of bars or cakes, would qualify for the reduced rate.

Main Issue: What are the defining characteristics or guiding principles to classify a product as “toilet soap” under HSN 3401 for the purpose of availing the 5% GST rate under Notification No. 9/2025, and how does it differ from other soaps taxed at 18%?

Tribunal Ruling: The Chhattisgarh Authority for Advance Ruling (AAR), comprising Smt. Yachana Tambrey and Dr. Bura Naga Sandeep, ruled that “toilet soaps” are those specifically intended for personal hygiene and skin care. The Authority noted that toilet soaps generally have a higher Total Fatty Matter (TFM) content and are formulated with milder ingredients suitable for the human body.

In contrast, soaps used for washing clothes or general household cleaning (laundry soaps) often contain harsher builders and lower TFM. The AAR clarified that the 5% rate is strictly reserved for “Toilet soaps” Entry 251, Schedule I. Any other soaps in the form of bars, cakes, or moulded shapes used for washing purposes fall under Heading 3401 but attract 18% GST (9% CGST + 9% SGST) as per Sr. No. 66 of Schedule II of the same notification, effective from September 22, 2025.

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