Unjha, a market town in North Gujarat, handles more than 80% of India’s isabgol (psyllium husk) trade, and processors there are caught again in a tax dispute that has simmered since the Goods and Services Tax arrived in 2017. The dispute turns on one word: “fresh.” Fresh, unprocessed isabgol seed carries no GST; dried seed attracts 5% duty. But no law defines “fresh” clearly, so processors pay GST on most of their purchases to avoid a compliance fight, according to Business Standard.
A dispute that keeps recurring
The All India Isabgol Processors Association raised the problem publicly last October, warning it would stop buying seed from farmers from October 6, 2025, unless the government clarified the classification. Refunds on GST wrongly paid on exempt seed do arrive eventually, but processors say the wait can run past a year, locking up crores in working capital in an industry that ships around ₹3,500 crore of psyllium husk abroad each year, with the United States taking 60-70% of that volume. Rajasthan grows most of India’s isabgol crop, about 70% of national output, but Gujarat does most of the processing, auctioning and exporting. Unjha alone handles the bulk of it, which is why a tax ambiguity drafted in Delhi lands hardest on one Gujarat market town.
The Gujarat Authority for Advance Ruling gave a partial answer this year. In a ruling dated May 29, 2026, the GAAR held that raw, unprocessed psyllium seed bought directly from farmers through APMC auctions qualifies as a fresh medicinal plant product under HSN 1211 and is fully exempt from GST, as reported by SAG Infotech’s tax desk. The exemption covers only seed that has not been dried, crushed or otherwise processed after the farmer sells it. Most of the trade’s everyday transactions fall outside that narrow window.
What it means for Unjha’s traders and Gujarat’s farmers
Unjha’s roughly 700-shop trading hub gets clarity on one leg of the supply chain from the GAAR ruling, but not on seed that gets dried or graded before resale, or on the husk-processing stage that generates most of the industry’s export value. Local reporting this week said trade activity in Unjha has reportedly slowed again as the broader classification question stays unsettled, a pattern that matches what the industry described last year, though the scale of any fresh disruption was not independently confirmed across multiple outlets at the time of writing. For farmers in North Gujarat and Rajasthan who sell into this market, a stalled trade means fewer buyers at APMC auctions during peak procurement weeks, and fewer buyers can depress prices even when the crop itself is healthy. For processors, every month without an industry-wide ruling is another month of capital sitting in refund claims instead of exports.
Outlook
The GAAR ruling binds only the applicant who sought it; other traders can cite it, but it carries no automatic force elsewhere. Real relief for the isabgol trade depends on the GST Council issuing a nationwide clarification that covers dried seed and processed husk, not just raw APMC purchases. Until that happens, Unjha’s processors will likely keep applying for advance rulings one at a time, and buying will likely keep slowing whenever compliance risk outweighs the appetite to purchase ahead of firm tax clarity.
Sources: Business Standard, SAG Infotech, Sandesh
This report was compiled and written with AI assistance from publicly reported sources, and reviewed for accuracy.