New GST on Milk in India: Tax Rates, Exemptions, and Input Credit
- The milk GST rate for fresh, pasteurised and UHT milk is generally Nil in India.
- Flavoured or milk-based beverages generally attract 5% GST, depending on their HSN classification.
- Condensed milk attracts 5% GST from 22 September 2025, reduced from 12%, while milk powder is generally taxed at 5%.
- Butter, ghee and cheese generally attract 5% GST, while pre-packaged and labelled paneer/chhena is now Nil-rated. Ice cream attracts 5% GST.
- Businesses may claim eligible ITC on inputs used for taxable dairy products, while ITC attributable to exempt milk supplies is generally not available.
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 revised milk GST rate depends on the type of milk or milk-based product. Several dairy products received lower GST rates from 22 September 2025
New GST Rate on Milk
| Milk Type | GST Rate | Rate Before 22 Sep 2025 | Taxable? |
|---|---|---|---|
| Fresh / pasteurised milk | Nil | Nil | No |
| UHT milk | Nil | 5% | No |
| Flavoured / milk-based beverages* | 5% | 12% | Yes |
| Condensed milk | 5% | 12% | Yes |
| Milk powder | 5% | 5% | Yes |
Milk Type
GST Rate
Rate Before 22 Sep 2025
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Taxable?
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*The exact rate for flavoured or milk-based beverages depends on the product’s HSN classification.
HSN Code for Milk and Milk Products
Each category of milk and milk product has an applicable HSN code based on its composition and processing.
| Milk Category | HSN Code |
|---|---|
| Fresh / pasteurised milk | 0401 |
| UHT milk | 0401 |
| Milk powder | 0402 |
| Condensed milk | 0402 |
| Beverages containing milk | 2202 |
Milk Category
HSN Code
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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 GST rates on common dairy products:
| Product | GST Rate | Rate Before 22 Sep 2025 |
|---|---|---|
| Butter / ghee | 5% | 12% |
| Cheese | 5% | 12% |
| Curd, pre-packaged and labelled | 5% | 5% |
| Curd, other than pre-packaged and labelled | Nil | Nil |
| Paneer / chhena, pre-packaged and labelled | Nil | 5% |
| Ice cream | 5% | 18% |
| Milk-based beverages / milkshakes under applicable HSN | 5% | 12% |
Product
GST Rate
Rate Before 22 Sep 2025
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Fresh and UHT milk are Nil-rated. Some dairy products such as non-packaged curd and paneer may also be Nil-rated, while processed dairy products generally attract 5% depending on their HSN classification.
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
The tax on milk in India depends on the type of milk or dairy product. Fresh, pasteurised and UHT milk are generally Nil-rated under GST, while milk powder, condensed milk and many milk-based beverages attract 5% GST, depending on their HSN classification. Dairy businesses should use the correct HSN code and applicable GST rate when billing and filing returns.
