GST on Milk and Milk Products: Rates Today and When a Dairy Must Register

GST on milk is nil: fresh milk, pasteurised milk, UHT milk and paneer carry no GST. Loose curd, lassi and buttermilk carry none either. Ghee, butter, cheese, ice cream and packed curd carry 5%. That is the short answer, and it holds as on 7 November 2026.

The part that catches dairies is registration. A dairy selling only milk stays out at any turnover. Sell ₹1 lakh of ghee beside it and the whole milk turnover starts to count.

This guide is general information, not tax advice. Your State, your products and your other income can change the answer, so confirm your own position with a CA before you act on it.

GST on milk products: rate and heading for each

Every rate below was read from the Gazette text of the two notifications, not from a news report. "Nil" entries sit in Notification 10/2025-Central Tax (Rate). The 5% entries sit in Schedule I of Notification 9/2025-Central Tax (Rate). The last column comes from the GST Council's list of changes.

Product	GST today	Where it is written	Changed on 22 September 2025?
Fresh and pasteurised milk, loose or in pouches	Nil	10/2025, S. No. 15, heading 0401	No
Fresh cream, not concentrated, no added sugar	Nil	10/2025, S. No. 15, heading 0401	Same entry as fresh milk
UHT milk	Nil	10/2025, S. No. 15	Yes, 5% to nil
Curd, lassi, buttermilk, loose	Nil	10/2025, S. No. 16, heading 0403	No
Curd, lassi, buttermilk, pre-packaged and labelled	5%	9/2025, S. No. 5	Not on the Council's list
Chena or paneer, loose	Nil	10/2025, S. No. 17, heading 0406	No
Chena or paneer, pre-packaged and labelled	Nil	10/2025, S. No. 17	Yes, 5% to nil
Ghee and butter	5%	9/2025, S. No. 7, heading 0405	Yes, 12% to 5%
Cheese	5%	9/2025, S. No. 8, heading 0406	Yes, 12% to 5%
Condensed milk	5%	9/2025, S. No. 4, heading 0402	Yes, 12% to 5%
Cream, concentrated or with added sugar	5%	9/2025, S. No. 4, heading 0402	Not on the Council's list
Yoghurt, sour or fermented cream	5%	9/2025, S. No. 5, heading 0403	Not on the Council's list
Milk powder	5%	9/2025, S. No. 4, as concentrated milk	Not on the Council's list
Ice cream	5%	9/2025, S. No. 141, 2105 00 00	Yes, 18% to 5%
Beverages containing milk	5%	9/2025, S. No. 151, 2202 99 30	Yes, 12% to 5%
Cattle feed (khurak)	Nil	10/2025, S. No. 105	Not on the Council's list

The third column gives the HSN heading or tariff item exactly as the notification prints it. An invoice may need a longer code, so let your CA set the HSN on your bills.

Milk powder needs one note. The entry does not use the word "powder". It falls here as concentrated milk under heading 0402, so check it with your CA if powder is a large part of your sales.

Khoa, shrikhand and sweets are not in this table. Ask your CA about each one by name, because the heading decides the rate.

What changed in GST on milk in September 2025

The GST Council met on 3 September 2025. On 17 September 2025 the Centre issued two notifications, and both came into force on 22 September 2025:

• Notification No. 9/2025-Central Tax (Rate), dated 17 September 2025. G.S.R. 641(E). It replaced Notification 1/2017 and holds the rate schedules.
• Notification No. 10/2025-Central Tax (Rate), dated 17 September 2025. G.S.R. 660(E). It replaced Notification 2/2017 and holds the exempt list.

For a dairy, ghee moved the most money. Take 1 kg of ghee priced at ₹600 before tax. At 12% the tax was ₹72. At 5% it is ₹30. On 100 kg a month that is ₹4,200 less tax on the same sale.

The 5% is a total. Schedule I sets central tax at 2.5%, and the matching State tax makes up the rest.

Packed or loose: the words that change the curd rate

Curd, lassi and buttermilk are the only items on this list where the packing moves the rate. The same curd is nil in a matka and 5% in a labelled cup.

Notification 10/2025 says "pre-packaged and labelled" means goods meant for retail sale, of not more than 25 kg or 25 litres, that are pre-packed under the Legal Metrology Act and must carry its declarations.

Your sale	Rate
Dahi sold loose from a vessel at your counter	Nil
Dahi in a labelled 400 g cup for retail sale	5%
Chaas in a labelled pouch for retail sale	5%
Paneer in a labelled 200 g pack	Nil
Ghee in any pack, or loose	5%

Paneer and ghee do not depend on the packing at all. Paneer is nil either way. Ghee is 5% either way.

When does a dairy need GST registration?

Three rules decide it.

Selling only exempt goods. Section 23(1)(a) says a person "engaged exclusively" in supplying goods that are not taxed or are wholly exempt is not liable to register. The turnover does not matter. A centre selling only fresh milk, loose curd, paneer and cattle feed is outside at ₹5 lakh and outside at ₹5 crore.

Selling one taxable item. The word "exclusively" is gone, so section 22 applies: you must register if you make a taxable supply and your aggregate turnover crosses the limit.

Counting the turnover. Section 2(6) counts exempt sales in aggregate turnover, on an all-India basis for one PAN. So your milk counts, even though milk carries no tax. CBIC's food processing FAQ gives the same reading.

The turnover limits

Where you are	Limit for a seller of goods only
Most States	₹40 lakh
Arunachal Pradesh, Meghalaya, Puducherry, Sikkim, Telangana, Uttarakhand	₹20 lakh
Manipur, Mizoram, Nagaland, Tripura	₹10 lakh
Any State, if you sell ice cream	Not the ₹40 lakh limit

The ₹40 lakh limit comes from Notification 10/2019-Central Tax of 7 March 2019. It names the States left out and it leaves out ice cream sellers. The ₹20 lakh and ₹10 lakh figures come from section 22. We read the State list as written in 2019, so ask your CA whether your State's limit has moved since.

The ₹40 lakh limit is for a seller of goods alone. Income from a service, such as transport or commission from a plant, can take you off that limit. It can also end the "exclusively exempt" position, depending on the service. Show your CA the whole income list, not only the milk sales.

Three sums at a typical dairy

Milk and paneer only, ₹80 lakh a year. Every sale is exempt. No registration, even though ₹80 lakh is twice the limit.

Milk ₹45 lakh plus ghee ₹1 lakh. Aggregate turnover is ₹46 lakh, which is over ₹40 lakh, and there is a taxable sale. Register. Tax is due only on the ghee, ₹5,000 on ₹1 lakh, but the registration, returns and paperwork cover the whole business.

Milk ₹30 lakh plus ghee ₹2 lakh. Aggregate turnover is ₹32 lakh. In a ₹40 lakh State, no registration yet. Add ice cream to the same counter and the ₹40 lakh limit no longer applies, so the same dairy is over its limit.

Once you are liable, section 25 gives you 30 days to apply.

A small ghee line can be worth less than the paperwork it brings. Run the profit calculator on the ghee alone, then ask your CA what returns will cost you a year. If you are near the limit, that sum should come before you put the first tin on the shelf.

GST on milk sale, milk packets and milk transport

Milk sale. GST on milk sold fresh is nil, whether you sell to a plant, a shop or a household. A registered dairy shows that sale on a bill of supply, covered below.

Milk packets. Pouch milk and UHT milk in a carton are nil. The pack changes the rate only for curd, lassi and buttermilk.

Milk and curd together. Milk is nil. Curd is nil when sold loose and 5% when pre-packaged and labelled, so put them on separate lines.

Milk transport. Notification 12/2017-Central Tax (Rate)1758720188.pdf) lists the exempt services. Three of its entries cover a milk run:

Who carries the milk	GST	Entry in 12/2017
A goods transport agency, by road	Nil	Entry 21, clause (d), "milk, salt and food grain"
Rail	Nil	Entry 20, clause (f)
A truck or tempo owner who is not a goods transport agency or courier	Nil	Entry 18

We read the text as consolidated to Notification 16/2025 of 17 September 2025. Hiring a vehicle with a driver, chilling and storage are separate services that we did not check, so ask your CA about those bills.

Do farmers need GST, and is there reverse charge on milk?

A farmer selling only milk makes exempt sales, so section 23(1)(a) covers him. No GST number is needed from your suppliers.

There is no reverse charge on milk bought from farmers. Heading 0401 is not on the goods reverse charge list1724408051.pdf) as consolidated to October 2023. The tax on a nil-rated item would be nil in any case.

Which bill does a registered dairy issue?

A registered dairy issues two kinds of paper:

• Bill of supply for exempt goods. Section 31(3)(c) requires this in place of a tax invoice.
• Tax invoice for ghee, butter, packed curd and other taxed goods.

If one sale holds both, CBIC's FAQ says a separate bill of supply is not needed for the exempt part when both sit on one tax invoice.

E-invoicing starts above ₹5 crore of turnover (Notification 13/2020, as amended), and that count includes exempt sales. It applies to taxed sales to registered buyers, not to exempt milk or to retail, says the GSTN FAQ.

GST aside, bills also need your 14-digit FSSAI number. FSSAI has required that on sale documents since 1 January 2022. Our FSSAI licence tool shows which category you fall in.

Can a dairy claim input tax credit?

Usually not. This surprises people who register by choice to "claim back the GST".

Credit needs a taxable sale at the end. Section 17(2) restricts it to the share used for taxable supplies, and rule 42 does the arithmetic on inputs and services. If all your sales are exempt, no credit survives. An unregistered centre gets none at all.

A mixed dairy keeps a share. Say a period has ₹90 lakh of milk sales and ₹10 lakh of ghee. Taxable sales are 10% of the total. Of ₹18,000 GST paid on a common service, ₹1,800 stays as credit and ₹16,200 is reversed. Your CA may treat a machine differently, since capital goods have their own rule.

So do not register just for credit. For a milk-only dairy it brings returns to file and nothing to claim.

Records worth keeping

Keep sales split by product, with loose and packed curd on separate lines. That split is what you and your CA need for the turnover count and for any notice.

Doodh Master keeps milk purchases, sales and the 10-day bills with supplier and date. It does not make GST invoices, HSN lines or GST returns for your sales, so a registered dairy needs a separate billing tool for taxed goods.

What to do next

List last year's sales by product and mark each one nil or 5% from the table above. If any line is 5%, add up the whole list and compare it with your State's limit. Take that one page to your CA. If you want the milk side of the record kept in order first, open the demo.