New GST on Dairy Products: What’s Taxable Under GST
Dairy products are a part of everyday life — milk, cheese, butter, curd, and more. But when it comes to taxation, do all dairy items attract GST? The answer depends on the product and how it is processed or packaged. In this blog, we’ll break down the gst on dairy products, covering everyday items sold in stores and markets across India.
Is GST Applicable on Dairy Products?
Yes, many dairy products fall under GST, but not all. The gst for dairy products varies depending on:
- Whether the product is fresh or processed
- Whether it is sold loose or packaged
- Whether it is branded or unbranded
Some items like milk are exempt, while others like cheese and flavored milk are taxable.
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New GST Rate on Dairy Products in India
The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for dairy products (no compensation cess).
New GST Rates on Common Dairy Products
| Dairy Product | New GST Rate | Remarks |
|---|---|---|
| Fresh milk (unpackaged) | 0% | Fully exempt |
| Pasteurized milk | 0% | Exempt if not in branded packaging |
| Curd, lassi, buttermilk | 0% | Exempt if sold unbranded and unpackaged |
| Branded curd/lassi | 5% | Taxable when sold under a brand name |
| Butter | 5% | Packaged and branded only |
| Ghee | 5% | Commonly used edible fat |
| Cheese | 5% | All cheese types; paneer/chhena expected Nil (exempt) |
| Condensed milk | 5% | Processed and sweetened dairy product |
| Flavored/processed milk | 0% or 5% | Depends on classification (milk-based vs beverage) |
| Ice cream | 18% | Considered a luxury or indulgent item |
Old GST Rates on Common Dairy Products
(Old GST Rates – Applicable Until 21st September)
| Dairy Product | New GST Rate | Remarks |
|---|---|---|
| Fresh milk (unpackaged) | 0% | Fully exempt |
| Pasteurized milk | 0% | Exempt if not in branded packaging |
| Curd, lassi, buttermilk | 0% | Exempt if sold unbranded and unpackaged |
| Branded curd/lassi | 5% | Taxable when sold under a brand name |
| Butter | 12% | Packaged and branded only |
| Ghee | 12% | Commonly used edible fat |
| Cheese | 12% | All types (paneer, processed cheese) |
| Condensed milk | 18% | Processed and sweetened dairy product |
| Flavored/processed milk | 12% or 18% | Depends on ingredients and packaging |
| Ice cream | 18% | Considered a luxury or indulgent item |
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GST on Dairy Products in India: Key Highlights
- Unprocessed and unbranded dairy items are often exempt from GST.
- Processed and packaged dairy products attract GST based on how they are classified.
- Branded dairy items, even if simple like curd or butter, may attract 5% to 12% GST.
- Products like flavored milk or ice cream fall into higher tax brackets like 18%, as they are considered value-added or luxury items.
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GST Compliance for Dairy Businesses
- Register for GST if your turnover exceeds ₹40 lakh (₹20 lakh in some states).
- Apply the correct GST rate based on the product and packaging.
- Issue GST-compliant invoices.
- File regular GST returns.
Proper classification and invoicing help avoid penalties and keep your business GST-compliant.
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Input Tax Credit on Dairy Products
Businesses can claim Input Tax Credit (ITC) on the GST paid for packaging, transportation, machinery, and services related to the sale of taxable dairy products.
No ITC is allowed if you’re dealing only in exempt items like unpackaged milk or curd.
Conclusion
The gst on dairy products in india ranges from 0% to 18%, depending on how the product is sold. While basic items like milk, curd, and buttermilk are often tax-free, processed and branded items like cheese, butter, ghee, and ice cream are taxed. For businesses, knowing the correct rates ensures better compliance and smoother operations.
As a Chartered Accountant with over 12 years of experience, I am not only skilled in my profession but also passionate about writing. I specialize in producing insightful content on topics like GST, accounts payable, and income tax, confidently delivering valuable information that engages and informs my audience.
Frequently Asked Questions
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Is GST applicable on milk?No, fresh milk is exempt from GST. Pasteurized milk is also exempt if not sold under a brand name.
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What is the GST on ghee and butter?12% GST applies when ghee and butter are sold in packaged and branded form.
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Are curd and lassi taxable?Unbranded curd and lassi are exempt. Branded versions attract 5% GST.
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What is the GST on cheese or paneer?Packaged and branded cheese or paneer attracts 12% GST.
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Is ice cream taxed under GST?Yes, all varieties of ice cream attract 18% GST, regardless of packaging or branding.