Milk HSN Code: Understanding the Classification for Different Milk Types
Milk is one of the most important food products in every household. It is used directly as a drink and also as an input for curd, paneer, sweets and many other products. For GST, milk and milk products are given special treatment so that basic nutrition remains affordable for common people. Knowing the correct milk HSN code helps dairy farmers, milk distributors and retailers file accurate returns.
In GST, milk is classified under the chapter for dairy produce. The HSN code changes based on whether the milk is fresh or concentrated, sweetened or unsweetened and whether it is sold in branded or unbranded form. Businesses must choose the correct line item because the GST rate can be zero or five percent depending on the product.
What is the HSN Code for Milk
Fresh milk that is not concentrated and not sweetened is normally classified under code 0401. This covers loose milk supplied by dairies as well as poly packed fresh milk for direct consumption. Milk and cream that are concentrated or sweetened, including milk powder and condensed milk, are classified under code 0402. These products are treated differently because they are more processed and have a longer shelf life.
| HSN Code | Product Description | Product Type or Variant | GST Rate |
|---|---|---|---|
| 0401 | Milk and cream, not concentrated, not sweetened | Loose or poly packed fresh milk for direct consumption | 0% |
| 0401 | Organic fresh milk and farm fresh milk | Branded or unbranded organic milk sold as liquid | 0% |
| 0402 | Milk and cream, concentrated or sweetened | Milk powder, condensed milk and sweetened milk | 5% |
| 1901 | Preparations based on milk | Flavoured milk drinks and malted milk drinks | 5% |
Classification of Fresh Milk and Packaged Milk under HSN
Fresh liquid milk supplied in pouches, cans or through tankers is generally covered under the HSN code for milk and cream that are not concentrated and not sweetened. This product is kept at a zero GST rate so that basic milk remains affordable. The same treatment usually applies whether the milk is supplied in loose form or in sealed pouches, as long as it is not processed further.
Packaged milk that is flavoured, sweetened or fortified may fall under a different heading covering milk based drinks. If the product has added sugar, flavours or other ingredients, it is no longer treated as simple fresh milk. In that case, it may attract five percent GST under the heading for milk preparations. Businesses should carefully read the product composition while choosing the HSN code.
How Organic Milk is Classified under HSN Code
Organic milk is produced without the use of synthetic chemicals and with special farming practices. However, for HSN classification it is still treated as milk and cream under code 0401 as long as it is not concentrated or sweetened. The term organic is mainly a marketing label and does not create a separate HSN code by itself.
If organic milk is converted into powder, condensed milk or flavoured milk drinks, it will move to the relevant code for those products. The important point is that classification is based on the physical form and processing level of the milk rather than the farming method.
GST Implications on Milk Products
Fresh milk under code 0401 is generally kept at a zero percent GST rate. This means suppliers do not charge GST on fresh milk. At the same time, they also cannot claim input tax credit on the inputs used to produce that milk. Concentrated and sweetened milk products under code 0402 are usually taxed at five percent, with full input tax credit available.
Flavoured milk drinks and other milk based preparations are also kept at a lower GST rate compared to many other food items. Businesses selling a mix of fresh milk and milk products should keep separate records for each HSN code so that their GST returns are correct and easy to explain during assessment.
Jagdish Prasad is a Chartered Accountant with over 5 years of experience. He helps people and businesses with GST, income tax, and HSN codes. Jagdish makes sure his clients follow all tax rules and save money the right way. He also enjoys writing simple articles to help others understand taxes and stay updated with the latest rules.
Frequently Asked Questions
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What is the HSN code for fresh milk supplied in pouches?
Fresh milk supplied in pouches or loose form is usually classified under HSN code 0401 for milk and cream that are not concentrated and not sweetened.
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Is GST charged on fresh milk under HSN code 0401?
Fresh milk under code 0401 is normally kept at a zero GST rate, so suppliers do not charge GST on such milk. However, they also cannot claim input tax credit on inputs used for that supply.
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What is the HSN code for milk powder and condensed milk?
Milk powder and condensed milk come under HSN code 0402 for milk and cream that are concentrated or sweetened. Such products generally attract GST at the rate of five percent.
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Does organic milk have a different HSN code?
No. Organic milk is classified under the same HSN code as regular fresh milk as long as it is in liquid form and not concentrated or sweetened. The term organic does not create a separate code under GST.
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How should a dairy business handle GST for milk and milk products?
A dairy business should use code 0401 for fresh milk and code 0402 or other relevant codes for milk powder, condensed milk and flavoured drinks. They should show each product in the correct HSN line in their GST returns for smooth compliance.