The GST Council has recommended a nil GST rate on isabgol, or psyllium, seeds in all forms, offering relief to traders, farmers and processors in Gujarat’s Unjha after a tax dispute disrupted trading at the local agricultural produce market committee (APMC) for more than two months.
The recommendation covers psyllium seeds whether fresh, chilled, frozen or dried. Unjha, in north Gujarat, is one of the world’s key centres for isabgol trade and processing. Trading at the Unjha APMC had remained suspended from July 26 because of uncertainty over the applicable GST rate. Operations resumed partially in early October, but many traders continued to wait for a uniform decision from the Centre.
Ashwin Nayak, president of the Isabgol Processors’ Association, described the recommendation as a major relief for the industry. He said trading had remained halted for over two months, affecting production and export commitments. Nayak also credited the Gujarat finance department, Unjha APMC and the Delhi tax research unit with representing the issue before the Union ministry.
The dispute followed conflicting interpretations by tax authorities in Gujarat and Rajasthan. In an order dated May 29, Gujarat’s Authority for Advance Ruling held that psyllium seeds supplied in their natural, raw and unprocessed form and purchased directly from farmers through APMC auctions qualified as “fresh” isabgol and were exempt from GST.
A subsequent ruling in Rajasthan said isabgol seeds stored in mandis or warehouses could be treated as dried and attract 5% GST. The differing interpretations created uncertainty for traders handling stocks and transactions across Gujarat and Rajasthan, particularly those holding GST-paid stocks from Rajasthan.
The disruption affected processing capacity in Unjha. More than 20 processing units had shut by late August, while processors warned that a prolonged interruption could damage the export-oriented trade. India supplies about 90% of its isabgol output to the United States and Europe, according to the Isabgol Processors’ Association.
Trading had resumed only partially by October 6, with around 20% of traders participating. Traders holding GST-paid Rajasthan stocks remained cautious because of concerns over possible tax scrutiny. The Council’s recommendation is expected to reduce that uncertainty, although the final effect on market activity will depend on how the decision is implemented and communicated to traders.
Unjha APMC estimates show that isabgol seeds were selling at Rs 2,700 to Rs 3,200 per 20kg. Local sources said the impact of the disruption on prices would become clearer after trading normalised. They added that prices could rise if stockists returned to the market, depending on available supply. The next stage for traders and processors is the implementation of the nil-rate recommendation and the restoration of normal APMC auctions.
