GST on Butter: From Dairy to Dining – What You Pay
Butter is a kitchen essential used in homes, restaurants, and bakeries across India. Whether it’s spread on bread or used in rich curries and baked goods, butter is a high-demand dairy product. This blog explains the GST rate on butter, relevant HSN code, its impact on pricing, and what dairy businesses and consumers need to know.
BOOK A FREE DEMO
Is GST Applicable on Butter?
Yes, GST is applicable on butter under the Indian Goods and Services Tax framework. Unlike some essential dairy items like milk, butter is not exempt from GST. Since butter is considered a processed and packaged dairy product, it attracts a standard GST rate, regardless of whether it’s used by households or commercial kitchens. Learn more about GST on food products for comparison.
GST Rate on Butter
The current GST rate on butter is 12%. This rate applies to:
- Packaged butter sold in retail outlets
- Butter used in food processing and commercial kitchens
- Salted and unsalted varieties
| Type of Butter | GST Rate |
|---|---|
| Packaged Dairy Butter (Retail) | 12% |
| Butter used by restaurants | 12% |
| Industrial bulk packs | 12% |
Understand GST on dairy products for related items like cheese and ghee.
HSN Code for Butter
| Product | HSN Code | GST Rate |
|---|---|---|
| Butter | 0405 | 12% |
| Ghee | 0405 | 12% |
Be sure to apply the correct HSN code in GST invoicing and returns.
Input Tax Credit (ITC) on Butter
Businesses that purchase butter for further use in production (such as in bakeries, restaurants, or processed food industries) can claim Input Tax Credit (ITC) on the 12% GST paid.
Conditions for ITC eligibility:
- Buyer must be GST-registered
- The purchase must be for business use
- A valid GST invoice with the correct HSN code must be available
To understand ITC across more categories, visit what expenses can be claimed as ITC.
Conclusion
The GST on butter is fixed at 12%, making it important for both consumers and businesses to understand how it affects pricing and tax credits. Whether used in daily cooking or commercial food preparation, butter remains a taxable processed dairy item under GST. With proper invoicing and compliance, businesses can also benefit through ITC, improving profitability in food production and service sectors. For additional clarity on food-related taxation, explore GST on food items.
I am a Chartered Accountant with 5 years of experience specializing in GST, income tax, and HSN code classification. I help businesses with GST compliance, tax planning, and financial advisory, ensuring they meet regulatory requirements while optimizing their tax strategies. I aim to simplify GST filings, income tax laws, and HSN code classifications, helping professionals and business owners stay informed and compliant.
Frequently Asked Questions (FAQs)
- What is the GST on butter in India?Butter is taxed at 12% GST under HSN code 0405.
- Is there any exemption on dairy butter under GST?No, all packaged butter attracts 12% GST.
- Can bakeries and restaurants claim ITC on butter purchases?Yes, if they are GST-registered and use it for business purposes.
- Does unsalted butter have a different GST rate?No, both salted and unsalted butter are taxed at 12%.
- What is the HSN code for butter under GST?The HSN code is 0405 for butter and related dairy fats.
