New GST on Butter: From Dairy to Dining – What You Pay
- 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.
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.
Stop Manual GST Checks. Validate Faster With BUSY
Join our guided walkthrough to see how BUSY can transform your business operations.
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.
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 applicable GST rates for butter along with the rates applicable before the GST revision.
| Type of Butter | GST Rate From 22 Sep 2025 | Rate Before 22 Sep 2025 |
|---|---|---|
| Packaged dairy butter (retail) | 5% | 12% |
| Butter used by restaurants | 5% | 12% |
| Industrial bulk packs | 5% | 12% |
Type of Butter
GST Rate From 22 Sep 2025
Rate Before 22 Sep 2025
Type of Butter
GST Rate From 22 Sep 2025
Rate Before 22 Sep 2025
Type of Butter
GST Rate From 22 Sep 2025
Rate Before 22 Sep 2025
Note: Butter and other fats derived from milk, including dairy spreads covered under HSN 0405, were reduced from 12% GST to 5% GST from 22 September 2025 under the GST rate
Bank Reconciliation Taking Time? Simplify It With BUSY
* No credit card required
HSN Code for Butter
| Product | HSN Code | GST Rate From 22 Sep 2025 |
|---|---|---|
| Butter | 0405 | 5% |
| Ghee | 0405 | 5% |
Product
HSN Code
GST Rate From 22 Sep 2025
Product
HSN Code
GST Rate From 22 Sep 2025
Note: Butter and ghee under HSN 0405 attract 5% GST from 22 September 2025, reduced from the earlier 12% GST rate. Ensure the correct HSN code is used for 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.
