--- title: "New GST on Butter 2026: 5% Rate on Butter, Dairy Spreads & Dairy" description: "New GST rate on butter in 2026 is 5% on all table butter, salted butter, white butter and spreads. Busy helps you apply the right GST rate on every invoice." canonical: "https://busy.in/gst-rates/butter/" author: "Apurva Maheshwari" published: "2025-07-21T09:53:28.000Z" category: "GST Rates" --- - GST on butter in India is **5% from 22 September 2025**, reduced from the previous 12%. - Butter and other milk fats or dairy spreads classified under **HSN 0405** generally attract **5% GST** when supplied as goods. - Butter is not exempt from GST. Unlike fresh milk, butter under HSN 0405 is taxable at **5%**. - The HSN code for butter is **0405**, which is relevant for GST invoicing and returns. - GST-registered businesses may claim Input Tax Credit (ITC) on eligible purchases of butter, subject to applicable ITC rules and restrictions. # New 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**](https://busy.in/gst/) , relevant [**HSN code**](https://busy.in/hsn/) , its impact on pricing, and what dairy businesses and consumers need to know. ## 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**](https://busy.in/gst-rates/food/) for comparison. ## **New GST Rate on Butter in India** The GST rate on butter was reduced from **12% to 5%**, effective from **22 September 2025**. Below are the current GST rates for butter (no compensation cess). | Type of Butter | GST Rate | | --- | --- | | Packaged dairy butter (retail) | **5%** | | Butter used by restaurants | **5%** | | Industrial bulk packs | **5%** | Understand **GST on dairy products** for related items like cheese and ghee. ## **Old GST Rate on Butter** **(Old GST Rates – Applicable Until 21 September 2025)** Before **22 September 2025**, the GST rate on butter was **12%**. This rate applied 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. Live Demo Available Today ## Bank Reconciliation Taking Time? Simplify It With BUSY Trusted by 6,00,000+ Users 4.6 Google Rating \* No credit card required ## HSN Code for Butter | Product | HSN Code | Old 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 bakeries or processed food industries, may claim Input Tax Credit (ITC) on the **5% GST paid**, subject to applicable GST rules. Conditions for ITC eligibility: - Buyer must be GST-registered - The purchase must be for eligible business use - A valid GST invoice with the correct HSN code must be available - ITC must not be restricted under the applicable GST scheme Restaurants paying **5% GST without ITC** on restaurant services cannot claim ITC on butter used for providing those services. To understand ITC across more categories, visit **what expenses can be claimed as ITC**. ## **Conclusion** The GST on butter is now **5%**, reduced from 12% from **22 September 2025**. Whether used in daily cooking, food processing, bakeries, or commercial kitchens, butter remains a taxable processed dairy product under GST. Eligible GST-registered businesses may claim Input Tax Credit on butter purchases, subject to applicable ITC rules. However, businesses operating under schemes where ITC is not allowed, such as restaurants paying 5% GST without ITC, cannot claim such credit. For additional clarity on food-related taxation, explore **GST on food items**. ## About the author **Apurva Maheshwari** 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 ### What is the GST on butter in India? Butter is taxed at **5% GST** under HSN code **0405** from 22 September 2025. ### Is there any exemption on dairy butter under GST? No. Butter is taxable under GST and generally attracts **5% GST** under HSN code **0405** from 22 September 2025. ### 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 attract **5% GST** from 22 September 2025. ### What is the HSN code for butter under GST? The HSN code is **0405** for butter and related dairy fats. ## Related articles - [New GST on Skincare Products: Rate, Branding & Retail Pricing](https://busy.in/gst-rates/skincare-products/) - [New GST on Industrial Machinery: Slabs, ITC & MSME Effect](https://busy.in/gst-rates/industrial-machinery/) - [New GST on Restaurant Meals: Dine-in, Takeaway & Delivery Compared](https://busy.in/gst-rates/restaurant-meals/) - [New GST on Kitchen Utensils: What’s Taxed and What’s Not?](https://busy.in/gst-rates/kitchen-utensils/) - [New GST on Online Education: Rate, Exemptions & EdTech Impact](https://busy.in/gst-rates/online-education/) - [New GST on Packaging Materials: Tax Implication Across Industries](https://busy.in/gst-rates/packaging-materials/) - [New GST on Digital Marketing Services: Tax Rates & Input Credit Explained](https://busy.in/gst-rates/digital-marketing-services/) - [New GST on Pesticides: Rates, Agri-Exemptions & Sector Impact](https://busy.in/gst-rates/pesticides/) - [GST on Honey: Rate, Applicability & Industry Outlook](https://busy.in/gst-rates/honey/) - [New GST on Medical Equipment: Current Rates, Exemptions & Healthcare Impact](https://busy.in/gst-rates/medical-equipment/)