GST on Milk, Paneer, Curd & Dairy Products in India (2026)

After the GST 2.0 reforms effective 22 September 2025, most everyday dairy is cheaper: fresh and UHT milk, paneer and curd are GST-exempt, while butter, ghee and cheese dropped to 5%. Here is the complete, up-to-date rate and HSN guide for dairy businesses.

Dairy is one of the most-searched GST topics in India — and the answer changed meaningfully with the GST 2.0 rate reforms that took effect on 22 September 2025. The Council rationalised the slabs and pushed most essential dairy either to nil or to a low 5%. This guide lays out exactly what applies to milk, paneer, curd, butter, ghee, cheese, milk powder and ice cream, with HSN codes and the packaged-vs-loose rules dairy sellers actually run into at the billing counter.

In short: fresh/pasteurised milk, UHT milk, paneer/chena and curd/lassi/buttermilk are GST-exempt (0%). Butter, ghee, cheese, milk powder and condensed milk are 5%. Ice cream is 18%.

Dairy GST rates at a glance (2026)

What changed under GST 2.0 (22 September 2025)

Before the reform, several dairy items sat at 12%, and pre-packaged, labelled paneer, curd and UHT milk attracted 5% while their loose equivalents were exempt. GST 2.0 simplified this:

• UHT milk moved from 5% to nil — the same as fresh and pasteurised milk.
• Pre-packaged and labelled paneer/chena moved from 5% to nil.
• Pre-packaged and labelled curd, lassi and buttermilk moved to nil.
• Butter, ghee and cheese were cut from 12% to 5%.
• Condensed milk and milk cans were reduced from 12% to 5%.

Net effect for shops and dairies: your everyday sellers — milk, curd, paneer — carry no GST at all now, whether loose or pre-packaged. Only value-added products (ghee, butter, cheese, powders) and ice cream are taxable.

Exempt dairy: milk, curd, paneer

Fresh milk and pasteurised milk (HSN 0401) have always been exempt, and UHT milk now joins them. Curd, lassi and buttermilk (HSN 0403) are exempt — the old distinction that taxed the pre-packaged, labelled versions at 5% has been removed. Paneer and chena (HSN 0406) are likewise exempt in both loose and pre-packaged & labelled forms. Because these are exempt supplies, a seller dealing only in them cannot claim input tax credit on related inputs, and issues a bill of supply rather than a tax invoice.

5% dairy: ghee, butter, cheese, powders

Value-added dairy sits at the 5% slab: butter and dairy spreads (HSN 0405), ghee (0405), cheese (0406), and milk powder / skimmed milk powder / condensed milk (0402). Businesses selling these charge 5% GST (2.5% CGST + 2.5% SGST intra-state, or 5% IGST inter-state) and can claim input tax credit on their taxable inputs, subject to the usual rules.

18% dairy: ice cream

Ice cream and other edible ice (HSN 2105) remain at 18%, regardless of whether it contains dairy. Restaurants and parlours should note that ice cream sold as part of a restaurant service can be taxed differently from ice cream sold as a packaged good over the counter — the classification depends on whether it is a supply of goods or a composite restaurant supply.

Packaged vs loose: does it still matter?

For milk, curd and paneer, the packaged-vs-loose split no longer changes the rate — both are exempt after GST 2.0. For most other food categories the 'pre-packaged and labelled' concept (as defined under the Legal Metrology Act) can still decide taxability, so it is worth understanding, but for the core dairy trio it has effectively been neutralised. For taxable dairy (ghee, butter, cheese), the 5% rate applies whether sold loose or packaged.

Frequently asked questions

Is there GST on milk in India?

No. Fresh, pasteurised and UHT milk are exempt from GST (HSN 0401). You issue a bill of supply, not a tax invoice, for exempt sales.

What is the GST rate on paneer?

Paneer and chena are exempt (0%) after the GST 2.0 reforms — including pre-packaged and labelled paneer, which earlier attracted 5%.

What is the GST on ghee and butter?

Ghee and butter are taxed at 5% (HSN 0405), reduced from 12% under GST 2.0.

Can a dairy claim input tax credit?

Only on taxable supplies. A business selling exempt items (milk, curd, paneer) cannot claim ITC on inputs used for them; a business selling 5% items (ghee, cheese, powders) can, subject to apportionment rules where it sells a mix of exempt and taxable goods.

Rates and classifications shown here reflect the GST 2.0 changes effective 22 September 2025 and are for general information only — they are not tax advice. GST rates can be revised by the GST Council. Always confirm the current rate and HSN classification for your specific product from the official CBIC notifications or your Chartered Accountant before billing. Last reviewed: September 2026.

Bill dairy correctly with KukBook

Getting the rate and HSN right on every dairy line is exactly what KukBook is built for. It keeps exempt and taxable items apart automatically, so your invoices, bills of supply and GST returns stay clean:

• Correct HSN + GST rate saved per item — exempt milk/curd/paneer vs 5% ghee/cheese vs 18% ice cream, applied automatically at billing.
• Bill of supply for exempt sales and a proper tax invoice for taxable ones, chosen for you.
• GSTR-1 and GSTR-3B prepared straight from your billing data, with HSN-wise summaries.
• Input tax credit tracking with exempt/taxable apportionment for mixed dairy businesses.
• Works offline as a PWA — bill at the counter even when the internet drops.