Selling handmade soap online in India: licences, GST rate and label rules

Making soap for sale needs a cosmetics manufacturing licence in Form COS-8 from your State Licensing Authority. You apply in Form COS-5 and pay ₹10,000 for up to ten items in a category. Toilet soap bars are HSN 3401 at 5% GST (Schedule I, S.No. 251 of Notification 9/2025-CT(R)); liquid soap is 18%.

Selzix Team

Oct 26, 20267 min read

Rows of handmade soap bars in many colours and swirled patterns stacked on a market table

In this post · 9 sections

Short answer: Making soap for sale needs a cosmetics manufacturing licence in Form COS-8 from your State Licensing Authority. You apply in Form COS-5 and pay ₹10,000 for up to ten items in a category. Toilet soap bars are HSN 3401 at 5% GST (Schedule I, S.No. 251 of Notification 9/2025-CT(R)); liquid soap is 18%.

Rules and rates checked on 24 October 2026. Sources are listed at the end of this page.

Licences and registrations

What	Do you need it?	Cost	Where
Cosmetics manufacturing licence (Form COS-8)	Yes, if you make the soap yourself	₹10,000 for up to ten items of a category, plus ₹500 for each additional item (Third Schedule). The licence is perpetual if you pay the retention fee before each five-year period ends (rule 30)	State Licensing Authority (State Drugs Control), Form COS-5 through the online portal
Cosmetics loan licence (Form COS-9)	Alternative to COS-8, if you use another licensee's facility	₹10,000 for up to ten items of a category, plus ₹500 for each additional item	State Licensing Authority, Form COS-6
GST registration	Yes if you ship to any other state; otherwise only above ₹40 lakh turnover (₹20 lakh or ₹10 lakh in some states)	No fee is stated in the notifications read	GST common portal (gst.gov.in)

Cosmetics manufacturing licence (Form COS-8). Under rule 23 of the Cosmetics Rules 2020, anyone who intends to manufacture cosmetics for sale applies to the State Licensing Authority. Rule 33 bars selling any Indian-made cosmetic not made by a licensed manufacturer. Rule 26 requires at least one whole-time technical person, for example with a D.Pharm or Intermediate with Chemistry, plus testing facilities or an approved lab.

Cosmetics loan licence (Form COS-9). A loan licence lets you manufacture on premises that hold a COS-8 licence. You apply in Form COS-6.

GST registration. Section 24(i) of the CGST Act makes registration compulsory for anyone making inter-State taxable supplies, whatever the turnover. Notification 10/2019-CT exempts goods-only sellers up to ₹40 lakh, but that exemption excludes section 24 cases and intra-state sellers in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand.

GST rate and HSN code

HSN 3401: Toilet Soap (other than industrial soap) in the form of bars, cakes, moulded pieces or shapes. GST rate: 5% (Notification 9/2025-CT(R), Schedule I, S.No. 251). Before 22 September 2025 it was 18%.

Schedule I, S.No. 251 covers "3401 Toilet Soap (other than industrial soap) in the form of bars, cakes, moulded pieces or shapes" at 5%. The PIB note lists toilet soap among items moved from 18% to 5% on 22 September 2025.

The rest of heading 3401 stayed at 18% under Schedule II, S.No. 66. That covers soap other than toilet soap bars, and "organic surface active products and preparations for washing the skin, in the form of liquid or cream and put up for retail sale". Liquid hand wash and body wash are taxed at 18%, even when handmade.

Your oils are mostly at 5%. Coconut oil (1513) is at Schedule I, S.No. 90, and other fixed vegetable oils (1515) at S.No. 92. Essential oils (3301) are in Schedule II, S.No. 58, at 18%.

Worked example: one sale at ₹249

Price the buyer pays (GST included)	₹249
Taxable value	₹237.14
Buyer in your state: CGST + SGST	₹5.93 + ₹5.93
Buyer in another state: IGST	₹11.86

What the label and product page must show

Inner and outer label: name of the cosmetic, and the manufacturer's name and full address of the premises where it was made (Cosmetics Rules rule 34(1)).
Use-before or expiry date in month and year (rule 34(1)(c)).
For soaps, give the month and year of manufacture instead of a batch number (rule 34(2)(a), proviso).
Manufacturing licence number, preceded by "M" or "Mfg. Lic. No." (rule 34(2)(b)).
Outer label: net weight. This is not needed for solid packs of 30 g or less (rule 34(3)).
Ingredients list headed "INGREDIENTS": those above 1% in descending order, then the rest in any order. This is not needed for packs of 30 g or less (rule 34(7)).
Toilet soap must meet IS 2888, including its labelling requirements (rule 34(8) and the Ninth Schedule).
Pack: MRP in rupees, stated as inclusive of all taxes (rule 6(1)(e)).
Product page: show every rule 6(1) declaration except the month and year of manufacture, which rule 6(10) lets online listings leave out.
Product page: return, refund, exchange, delivery and payment terms, and the total price as one figure (Consumer Protection (E-Commerce) Rules 2020, rule 7(1)).
Website: your legal name, address, customer care contact and a grievance officer who acknowledges complaints within 48 hours and resolves them within one month (E-Commerce Rules, rules 4(2), 4(4), 4(5)).

Packing, shipping and listing

A ₹249 bar at 5% GST has a taxable value of ₹237.14 and tax of ₹11.86.

The Seventh Schedule of the Cosmetics Rules recommends a minimum of 100 square metres for small-scale toilet soap manufacture. It also lists equipment such as kettles or pans for saponification, a plodder, a cutter and a stamping machine. Rule 26 requires records of each batch and its raw materials, kept for three years.

If you have a licensed unit make your soap and sell it under your brand, the label must name the actual manufacturer and its address (rule 34(1)(b)). The loan-licence route in Form COS-9 is the other option.

Mistakes to avoid

Selling from a home kitchen before the COS-8 licence is granted. Rule 33 bars the sale of cosmetics not made by a licensed manufacturer.
Charging 5% on liquid soap or body wash. Liquid and cream skin-washing products are 18% under Schedule II, S.No. 66.
Printing a batch number but no month and year of manufacture. For soap, rule 34 asks for the month and year.
Leaving out the M.L. number or the ingredient list on bars over 30 g.
Missing the five-yearly retention fee. A late fee of 2% a month runs for up to 180 days, after which the licence is deemed cancelled (rule 30).

On your own Selzix store

You set the HSN code and GST rate on each product, and every order gets a GST invoice with the CGST and SGST or IGST split worked out from the buyer's state. Not sure you need GST at all? Read GST for online sellers in India.

Questions sellers ask

Do I need a licence to sell handmade soap in India?

Yes. Soap is a cosmetic under the Cosmetics Rules 2020, and you need a COS-8 manufacturing licence from your State Licensing Authority, applied for in Form COS-5. The fee is ₹10,000 for up to ten items in a category. You can also make the soap under a loan licence at someone else's licensed unit.

What is the GST on handmade soap?

5% for toilet soap bars, cakes and moulded shapes (HSN 3401, Schedule I, S.No. 251), down from 18% on 22 September 2025. Liquid or cream soaps for washing the skin stay at 18% under Schedule II, S.No. 66.

What should a handmade soap label contain?

The product name, the manufacturer's name and address, the month and year of manufacture, the expiry or use-before date and the manufacturing licence number. Packs over 30 g also need net weight and an ingredients list. Add the MRP inclusive of taxes under the Legal Metrology rules.

Sources

The Cosmetics Rules, 2020 (G.S.R. 763(E), 15 December 2020), Central Drugs Standard Control Organization (read 24 October 2026)
Notification No. 9/2025-Central Tax (Rate), 17 September 2025 (Gazette copy), Ministry of Finance, Department of Revenue (copy hosted by EPCES) (read 24 October 2026)
Notification No. 9/2025-Central Tax (Rate), CBIC Tax Information Portal (read 24 October 2026)
Recommendations of the 56th Meeting of the GST Council (press release with Annexures I and II), Press Information Bureau, Ministry of Finance (copy on GST Council website) (read 24 October 2026)
Legal Metrology (Packaged Commodities) Rules, 2011 (rules 2, 3, 6, 26), LegitQuest (bare act text) (read 24 October 2026)
Consumer Protection (E-Commerce) Rules, 2020, LegitQuest (bare act text) (read 24 October 2026)
Notification No. 10/2019-Central Tax: registration exemption up to Rs 40 lakh for suppliers of goods, GSTZen (notification text) (read 24 October 2026)
Section 24: compulsory registration under GST, TaxGuru (read 24 October 2026)

General information, not tax or legal advice. Rules change; check the source before you file or apply. Cover photo: Townsend Walton on Unsplash.