The government has announced sweeping GST rate cuts across the dairy sector in a bid to spur demand in India’s ₹19 lakh crore industry and provide relief to millions of farmers and consumers.
Following the 56th GST Council meeting on Wednesday, the Ministry of Fisheries, Animal Husbandry & Dairying said most dairy products will now either be exempt from GST or attract a minimal 5% levy. The changes will take effect from September 22, 2025.
Under the revised structure:
Ultra-High Temperature (UHT) milk: GST reduced to nil from 5%
Paneer/Chhena (pre-packaged and labelled): GST cut to nil from 5%
Butter, ghee, dairy spreads, cheese, condensed milk, milk-based beverages: Reduced to 5% from 12%
Ice cream: Cut to 5% from 18%
Milk cans: Down to 5% from 12%
The ministry said the reforms represent one of the most comprehensive overhauls of GST rates for milk and milk products, with direct benefits expected for over 8 crore rural farmer families—particularly small, marginal, and landless labourers engaged in animal husbandry.
“This significant tax rationalization is expected to boost the dairy sector and extend benefits to both farmers and consumers, contributing to socio-economic development,” the statement noted.
India, the world’s largest milk producer, recorded an output of 239 million tonnes in 2023-24, accounting for nearly 24% of global production. The domestic dairy sector was valued at ₹18.98 lakh crore in 2024.
Officials said the lower tax burden would help reduce operational costs, curb adulteration, and enhance the sector’s competitiveness. “These reforms will further enhance productivity while ensuring sustainable livelihoods,” the ministry added.