Contrasted with different businesses, the dairy segment has coordinated branches of dairy makers in India. In spite of the fact that the most recent data is demonstrative that GST (Goods and Services Tax) has been applied with Nil and 5% on all items.
56th GST Council Meeting Updates
The GST Council meeting has made the following changes, which will be effective from 22nd September 2025.
GST Applicability on Production and Sale of Milk, Curd and Paneer
In the 56th GST Council meeting held on 3rd and 4th September, the Finance Minister proposed a new GST 2.0 rate on dairy products. The reforms aim to simplify the tax structure and provide relief to consumers.
The council decided to apply a new 5% GST rate on pre-packaged and labelled milk products, including paneer, curd, lassi, and buttermilk. Ultra-High Temperature (UHT) milk also falls under the 5% category. Other dairy products, such as condensed milk, cheese, butter, and ghee, are taxed at the revised GST 2.0 rate.
Under the GST regime, fresh milk and pasteurised milk will completely remain in the exemption. Likewise, there is no GST applicable as long as paneer, curd, and buttermilk are sold loose, i.e., without any pre-packaging and branding.
GST Rate and HSN Code on Dairy Products (Milk, Curd, Paneer)
Chapter 4 of the GST Act, 2017 deals with milk products, including cheese, cream, and curd. The table given below will help you understand the applicable GST rates on dairy products and their HSN codes:
| Dairy Products | New GST Rate from 22nd September 2025 | HSN Codes |
|---|---|---|
| Fresh Milk and Pasteurised Milk, Milk and Cream, Including Separated Milk, but Not Concentrated nor Sweetened, Excluding Uht Milk | NIL | 0401 |
| Ultra-High Temperature (UHT) Milk | 5% | 0401 |
| Milk and Cream (concentrated or sweetened), Including Skimmed Milk Powder, but Excluding Condensed Milk | 5% | 0402 |
| Yoghurt, Cream, and Other Fermented or Acidified Milk and Cream (concentrated or otherwise) | 5% | 0403 |
| Lassi, Curd, and Buttermilk (pre-packaged and labelled) | 5% | 0403 |
| Buttermilk, Curd and Lassi (excluding pre-packaged and labelled) | NIL | 0403 |
| Products Consisting of Natural Milk Constituents (concentrated and sweetened or otherwise) | 5% | 0404 |
| Paneer or Chena (pre-packaged and labelled) | 5% | 0406 |
| Paneer or Chena (excluding pre-packaged and labelled) | NIL | 0406 |
| Condensed Milk | Nil | 0402 91 10, 0402 99, 20 |
| Soya milk drinks | 5% | 2202, 99, 10 |
| Beverages containing milk | 5% | 2202, 99, 30 |
| Plant-based milk drinks | 5% | 2202, 99 |
| Milk cans made of Iron, Steel, or Aluminium | 5% | 7310, 7323, 7612, or 7615 |
| Pizza bread | 5% | 1905 |
| Butter and other fats (i.e. ghee, butter oil, etc.) and oils dairy spreads | 5% | 0405 |
| Dairy Machinery and Milking Machines | 18% | 8434 |
How GST is Calculated on Dairy Products (Milk, Curd, Paneer)?
Fresh and pasteurized milk that is unsweetened or concentrated will not be subject to any GST tax from 18th July 2022. However, UHT milk will have a 5% GST tax. To provide an example, if the maximum retail price (MRP) of UHT milk is Rs. 60, then the GST amount would be:
GST = Rs. 60 * 5% = Rs. 3
Similarly, pre-packaged and labelled dairy products including paneer and curd, will have a 5% GST tax applied. For instance, if a branded packet of paneer or curd costs Rs. 120, then the GST amount would be:
GST = Rs. 120 * 5% = Rs. 6
How to Claim GST Credit on Dairy Products (Milk, Curd, Paneer)
According to Section 16(1) of the CGST Act, a registered taxable individual can claim an input tax credit (ITC) on goods and services used to support the business as a seller of these dairy products. However, Section 17(5) of the CGST Act specifies several conditions under which ITC cannot be claimed.
GST Rate Changes on Dairy Products (Milk, Curd, Paneer)
Since the GST law came into existence, milk products, including paneer and curd, have been exempt from tax. However, GST rates on milk have been reviewed in the 56th GST Council meeting because of issues over rate justification, with the compensation procedure in the states to be finalized.
The issue was intensified further as the reports mentioned the exemption of GST on some pre-packaged food products and considered it one of the prominent reasons for revenue leakages. Many businesses that were not registered but were selling products under their brand name, had been selling goods without paying any GST. Resultantly, the GST Council suggested a GST levy on these pre-packaged and labelled products.
Moreover, some of the previous explanations and modifications made to the GST levy on some milk products are summarised below:
Fortified Toned Milk
According to the CBIC Circular No. 52/26/2018-GST, dated 9th August, fortified toned milk with vitamins including Vit A and D, will not be subject to any GST. HSN code 0401 covers fortified toned milk.
Khoya/Mawa
According to F.No. 332/2/2017-TRU, dated 7th December 2017, Khoya or Mawa is categorised as concentrated milk under HSN code 0402, hence there will be a 5% GST levy applicable.
The dairy sector was always seen as a major source of nourishment in a country like India, which credits the health motto as its first motto. The GST is seen as better for each and every sector, and this is the same fact that the ministry also expresses.
FAQs on Dairy Products (Milk, Curd, Paneer)
Q.1 Is Flavoured Milk Subject to GST?
Yes, flavoured milk comes under 5% GST rate because flavored milk is not regarded as milk.
Q.2 Does Amul Milk Come under GST?
Amul Milk sells packaged milk which is considered fresh or pasteurized milk and does not attract GST. But a 5% of GST will be levied if the Amul milk is sweetened or condensed.
Q.3 Is Milk Powder Subject to GST? How Much?
Following the 56th GST Council meeting’s recommendations, milk powder is categorized under 5% GST.
Q.4 How Much GST Is Levied on Packed Milk?
Packed milk is exempt from GST levy, except the Ultra-High Temperature (UHT) milk. Also, there is no GST applicable in India unless the milk is unsweetened and not concentrated.
Q.5 How Much GST Levied on Paneer?
The GST on paneer is based on whether it is packaged or not. Generally, paneer is not under the GST regime, but pre-packaged and labeled paneer is subject to 5% GST rate.
Q.6 Is Yoghurt Subject to GST?
Yes, Yoghurt is subject to 5% GST rate.
Q.7 Does Flavoured Lassi Come under GST?
Flavoured lassi is not subject to any GST rate, unlike flavoured milk, as per the ruling of AAR on the GST exemption in July 2021, in the case of “Sampoorna Dairy and Agrotech” sought for clarification.
