Most dairy products are now either exempt from tax or attract only a 5 per cent tax rate
Aimed at strengthening India’s dairy sector, the 56th Goods and Services Tax (GST) council, in its meeting held on 3 September 2025, approved tax rationalisations on milk and milk products. Under the revised structure, effective from 22 September 2025, most dairy products are now either exempt from tax or attract only a 5 per cent rate.
For Ultra‑high Temperature (UHT) milk, Paneer/Chhena (pre-packaged and labelled), the GST rate has been reduced from 5 per cent to nil. The centre has reduced the GST from 12 per cent to 5 per cent on butter, ghee, dairy spreads, cheese and condensed milk. The reform will directly benefit over eight crore rural farmer families, particularly small, marginal and landless labourers engaged in rearing milch animals for their livelihoods, while also supporting a large segment of consumers, the Ministry of Fisheries, Animal Husbandry and Dairying said in a statement.
While the GST for beverages containing milk and milk cans has been slashed from 12 per cent to 5 per cent, ice creams will now be taxed at 5 per cent as compared to 18 per cent earlier. The Centre explained that lower taxation will help reduce operational costs, curb adulteration, and enhance the competitiveness of the Indian dairy products in both domestic and export markets.
India is the world’s largest milk producer, with an output of 239 million tonne in 2023–24, accounting for about 24 per cent of global milk production. As the single largest agricultural commodity, dairy contributes 5.5 per cent to the national economy. Milk and milk products make up the largest share of value in the livestock sub-sector, with the value of milk output reaching Rs 12.21 lakh crore at current prices in 2023–24.
Centre emphasised that the overall market size of the Indian dairy sector is estimated at Rs 18.98 lakh crore in 2024. These recent GST reforms will give a major boost in further enhancing the productivity and competitiveness of the sector while ensuring sustainable livelihoods.
