GST Cut on Milk and Dairy Products to Help 8 Crore Rural Farmers and Boost Dairy Sector

New Delhi, Sep 5 – Big tax changes in India’s dairy sector are expected to help over 8 crore rural farmer families and make dairy products more affordable and competitive, the government said.

The 56th GST Council recently approved key reforms that lower taxes on milk and milk-based products. Most dairy items are now either tax-free or taxed at just 5%. These changes aim to support farmers, lower costs for consumers, and strengthen India’s position in the global dairy market.

India is the world’s largest milk producer, with 239 million tonnes produced in 2023–24. The dairy sector makes up 5.5% of the country’s total economy and plays a major role in rural livelihoods. The value of milk production in 2023–24 was ₹12.21 lakh crore, and the overall dairy market is estimated to be ₹18.98 lakh crore in 2024.

Before the change, regular milk (except UHT milk) was already tax-free. Now, UHT milk has also been made GST-free to keep things consistent.

Plant-based milk drinks, like almond or oat milk, were taxed at 18%, while soya milk drinks had a 12% tax. After the reform, both now carry just 5% GST, making them more affordable.

There’s also a tax change for paneer (Indian cottage cheese). Paneer sold without packaging was already tax-free. Now, even pre-packaged and labelled paneer will be taxed at a lower rate to support small-scale dairy businesses.

The government said these GST cuts will reduce costs, prevent adulteration, and improve the quality and reach of Indian dairy products. It will also give a much-needed boost to small and landless farmers who depend on dairy for their income.

These reforms are expected to help both producers and consumers while supporting India’s growing dairy industry at home and abroad.