Toilet Soap vs Laundry Soap under GST: AAR Clarifies Classification of Dual-Use Soap under HSN 3401

The company, M/s Tarwani Soap Industries (applicant), has filed an application dated October 14, 2025, seeking the Chhattisgarh Authority for Advance Ruling (AAR) Goods and Services Tax (GST) under Section 98 of the Chhattisgarh Goods and Services Tax Act, 2017.

The applicant possesses its registered office at Dhusera, Village-Dewarbhatta, Manabasti, Abhanpur, Raipur, Chhattisgarh, and is registered under GST, having GSTIN 22AAOFT9412HIZ1.

The applicant is engaged in the manufacture and supply of soap, primarily serving rural markets. The soap manufactured is multi-use and can be used for both personal hygiene (bathing) and laundry purposes, depending on consumer preference. Considering the proposals suggested in the recent 56th GST Council meeting held on September 03 and 04, 2025, the government issued a Notification No. 9/2025-CentralTax(Rate) dated September 17, 2025, effective from September 22, 2025, which has changed GST rates on soaps under HSN Code 3401. Now, the applicant has some questions regarding its business.

Questions Asked Before Chhattisgarh AAR:
The applicant has asked the following questions seeking the Chhattisgarh Authority for Advance Ruling (AAR):

“(i) The definition or guiding principle for determining “toilet soap” under HSN 3401, as referred to in Schedule I, Entry No. 251 of Notification No. 9/2025-Central Tax (Rate), 2025;
(ii) What constitutes “other soap (not toilet soap)” under Schedule II, Entry No.66 of the said notification:
(iii) Whether, given the composition of the applicant’s soap (having TFM>60%) and its dual- use nature (bathing and laundry). The product should be classified under HSN 3401 19 41 (“Toilet soap”) or HSN 340119 42 (“Laundry soap”);
(iv) The applicable GST rate thereon.”

Answers Given by Chhattisgarh AAR:
The Chhattisgarh Authority for Advance Ruling (AAR) has given the following answers to the questions asked by the applicant:

Answer (i): H.S. Code 3401 11, belonging to goods for toilet use (including medicated products), is the definition or guiding principle for determining “toilet soap” under heading no. 3401, as referred to in Schedule I, Entry No. 251 of Notification No. 9/2025-Central Tax (Rate), 2025, dated September 17, 2025.

Answer (ii): “Laundry soaps” constitute “other soap (not toilet soap)” under Schedule II, Entry No. 66 of Notification No. 9/2025-Central Tax (Rate), 2025, dated September 17, 2025.

Answer (iii): As per the information submitted by the applicant, “Toilet soaps” for washing the skin, manufactured and sold/supplied by the applicant, fall under ITC (HS) Code 3401 11 90, while “Laundry soaps” (other than toilet soaps) for washing purposes, manufactured and sold/supplied by the applicant, merit classification under 340119 42.

Answer (iv): As per Serial no. 251 of Schedule-I to Notification no. 9/2025-Central Tax (Rate) 2025, read with the corresponding Integrated Tax (Rate) Notification, both effective from September 22, 2025, toilet soaps (other than industrial soaps) in the form of bars, cakes, moulded pieces or shapes manufactured and sold or supplied by the applicant for washing of skin are classified under Heading no. 3401, attract GST at 5% [CGST 2.5% + CGGST 2.5%]

On the other hand, as per Serial no. 66 of Schedule II to Notification no. 9/2025-Central Tax (Rate) 2025, read with the corresponding Integrated Tax (Rate) Notification, both effective from September 22, 2025, laundry soaps in the form of cakes, moulded pieces or shapes, whether or not containing soap [other than toilet soap in the form of bars], cakes, moulded pieces or shapes manufactured and sold/supplied by the applicant for washing purposes are classified under Heading no. 3401; it attracts GST at 18% [CGST 9% + CGGST 9%].