New GST on Milk in India: Tax Rates, Exemptions, and Input Credit
Milk is one of the most essential items in every Indian household. But how does taxation affect this everyday product under the Goods and Services Tax (GST) system? In this blog, we’ll break down the GST on milk, including what’s exempt, what’s taxable, applicable HSN codes, and how businesses can deal with Input Tax Credit (ITC) .
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Is Milk Taxable Under GST?
The answer depends on the type of milk being sold. Under GST:
New GST Rate on Milk in India
The Government of India is updating GST rates effective after 22 Sep 2025. Below are the expected new GST rates for milk and related products (no compensation cess).
New GST Rate on Milk
| Milk Type | New GST Rate | Taxable? |
|---|---|---|
| Fresh milk (unbranded, unflavored) | 0% | No |
| Flavored milk | 5% | Yes |
| Condensed or powdered milk | 5% | Yes |
Old GST Rate on Milk
(Old GST Rates – Applicable Until 21st September)
| Milk Type | New GST Rate | Taxable? |
|---|---|---|
| Fresh milk (unbranded, unflavored) | 0% | No |
| Flavored milk | 5% | Yes |
| Condensed or powdered milk | 5% | Yes |
This makes fresh milk an exempted good, while value-added milk products fall under different GST slabs.
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HSN Code for Milk and Milk Products
Each category of milk is assigned an HSN (Harmonized System of Nomenclature) code for proper classification under GST.
| Milk Category | HSN Code | GST Rate |
|---|---|---|
| Milk (fresh, unflavored) | 0401 | 0% |
| Flavored/processed milk | 0402 / 2202 | 12% |
| Milk powder / condensed milk | 0402 | 5% / 12% |
Businesses dealing in milk must use these codes for correct invoicing and tax filing.
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New GST Rate on Milk-Based Products?
Here’s a snapshot of New GST rates on related dairy products:
| Product | New GST Rate |
|---|---|
| Butter, cheese, curd | 5% |
| Paneer (packed) | 0% |
| Ice cream | 5% |
| Milkshakes | 5% |
Only plain milk remains exempt—everything else is subject to GST depending on processing, packaging, and branding.
Old GST Rate on Milk Products
| Product | GST Rate |
|---|---|
| Butter, cheese, curd | 5% |
| Paneer (packed) | 0% |
| Ice cream | 5% |
| Milkshakes | 5% |
Only plain milk remains exempt—everything else is subject to GST depending on processing, packaging, and branding.
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Input Tax Credit (ITC) for Dairy Businesses
If you’re a manufacturer or supplier dealing with taxable milk products (like flavored milk or milk powder), you can claim Input Tax Credit (ITC) on:
- Packing materials
- Transport and distribution
- Machinery used for processing
However, ITC is not available for businesses dealing only in exempt milk (0% GST).
Key Points for Retailers & Suppliers
- GST on milk applies only to processed, flavored, or condensed milk, not fresh unprocessed milk.
- Always issue invoices with correct HSN codes .
- Track your input and output taxes carefully if you’re dealing in both exempt and taxable milk products.
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Final Thoughts
While milk is a basic necessity, not all forms of it are exempt from GST. The gst on milk in India is 0% for fresh milk, but flavored, powdered, and condensed forms are taxed. For dairy businesses, understanding these differences is crucial for tax compliance and pricing. Always refer to the correct HSN code and GST slab when billing or filing returns.
