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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    GST Rates

    Is Milk Taxable Under GST?

    The answer depends on the type of milk being sold. Under GST:

    Milk Type GST Rate Taxable?
    Fresh milk (unbranded, unflavored) 0% No
    Flavored milk 12% Yes
    Condensed or powdered milk 5% or 12% 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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    What About Milk-Based Products?

    Here’s a snapshot of GST rates on related dairy products:

    Product GST Rate
    Butter, cheese, curd 5% – 12%
    Paneer (packed) 5%
    Ice cream 18%
    Milkshakes 18%

    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.

    Frequently Asked Questions (FAQs)

    • Is fresh milk exempt from GST in India?
      Yes, fresh, unflavored, and unbranded milk attracts 0% GST.
    • What is the GST rate on flavored milk?
      12% GST is applicable under HSN 2202 or 0402.
    • Is condensed milk taxable under GST?
      Yes. It is taxed at 5% or 12% depending on how it’s processed and packaged.
    • Can dairy businesses claim ITC on milk production?
      Only if they deal with taxable milk products. If they sell only fresh milk (0%), ITC is not allowed.
    • Does milk sold in tetra packs attract GST?
      Yes. Most flavored or long-life milk sold in tetra packs falls under 12% GST.
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