The government announced major tax relief for the Rs 19 lakh crore dairy sector, stating that most dairy products will now either be exempt from GST or attract only a 5% rate. The Ministry of Fisheries, Animal Husbandry & Dairying said the decision, cleared by the 56th GST Council meeting on Wednesday, marks one of the most comprehensive overhauls of tax rates in the industry and is expected to boost demand.
As per the revised structure effective September 22, 2025, the GST on UHT milk has been reduced from 5% to nil, while pre-packaged paneer and chhena will also now be exempt from tax. Products such as butter, ghee, dairy spreads, cheese, condensed milk, and milk-based beverages will attract 5% GST instead of the earlier 12%. Additionally, the GST on ice cream has been lowered from 18% to 5%, and milk cans will also see a reduction to 5% from 12%.
The ministry said the sweeping rationalisation will not only make dairy products more affordable for consumers but also benefit farmers by driving higher demand across categories. It added that the move would strengthen the dairy value chain and contribute to the overall socio-economic development of the country.
