The Ministry of Fisheries, Animal Husbandry & Dairying announced that the 56th GST Council’s decision to rationalize tax rates on dairy products, effective from September 22, 2025, will significantly stimulate India’s ₹18.98 lakh crore dairy industry. The reforms, described as one of the most comprehensive overhauls of GST rates in the sector, ensure that most dairy products are either exempt from tax or attract a minimal 5 percent rate, fostering growth and affordability.

Key changes include reducing the GST on ultra-high temperature (UHT) milk and pre-packaged paneer/chhena from 5 percent to nil, and slashing rates on butter, ghee, dairy spreads, cheese, condensed milk, milk-based beverages, and ice cream from 12 or 18 percent to 5 percent. Milk cans also see a reduction from 12 percent to 5 percent. These measures are expected to lower operational costs, curb adulteration, and enhance the sector’s competitiveness, directly benefiting over 8 crore rural farmer families, including small, marginal, and landless laborers reliant on dairy farming.

India, the world’s largest milk producer with an output of 239 million tonnes in 2023–24, accounts for 24 percent of global milk production. The ministry emphasized that the tax rationalization will drive demand, improve productivity, and ensure sustainable livelihoods for farmers while making dairy products more affordable for consumers. By reducing financial burdens and enhancing market access, the reforms are poised to contribute significantly to socio-economic development, reinforcing the dairy sector’s pivotal role in India’s economy.

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