GST on Milk, Paneer, and Curd: HSN Code and GST Rate

India’s GST rates on dairy and plant-based milk products have undergone major rationalisation after the 56th GST Council meeting in September 2025, simplifying the slabs and updating exemptions and rates for a range of goods.

Key Takeaways

• Most processed/pre-packaged dairy products are now taxed at a flat 5%, replacing the previous mix of 5%, 12%, and 18% slabs.
• Pure, fresh, or pasteurised milk and unpackaged paneer, curd, lassi, and buttermilk remain exempt from GST.
• Plant-based and soya milk drinks are now explicitly included in the 5% slab.
• All milk cans—iron, steel, or aluminium—now attract a 5% GST.
• New product rates are legally effective from 22nd September 2025 as per Central Tax Notifications 09/2025-CTR & 10/2025-CTR

Taxability of Production and Sale of Milk, Paneer, and Curd under GST 

The 56th GST Council meeting, held on September 3, 2025, brought significant reforms to GST rates on milk and dairy products to simplify the tax structure and promote ease of compliance. Prior to these changes, dairy products faced varied GST rates ranging from 5% to 18%, with some products like paneer and UHT milk taxed at 5%, and others like ghee and butter at 12%. 

From September 22, 2025, most essential dairy items including UHT milk and paneer have been exempted from GST, while products like butter, ghee, and cheese now attract a reduced rate of 5%. Milk cans, previously charged at 12%, have also been reduced to 5%. 

This rationalization aims to reduce the tax burden on consumers, boost the dairy industry, and support small farmers by easing costs and curbing tax evasion. These changes underline the priority given to essential and food items in the GST 2.0 reforms.

GST Rate on Milk, Paneer, and Curd with HSN codes

How to Calculate GST on Milk, Paneer, and Curd?

From September 22, 2025, fresh and pasteurised milk remain fully exempt from GST. Pre-packaged items such as UHT milk, paneer, and curd are also exempt, benefiting consumers with zero tax on these products. However, dairy products like butter, ghee, cheese, and similar items attract a reduced GST rate of 5%.

For example, if a packet of butter costs Rs. 200, GST will be:

200 × 5% = Rs.10,
making the total price Rs. 210.

Input Tax Credit Claims for Milk, Paneer, and Curd

As per Section 16(1) of the CGST Act, a registered taxable person may claim an input tax credit (ITC) on goods and services used to further the business as a seller of these dairy products. However, Section 17(5) of the CGST Act imposes various conditions for when ITC cannot be claimed, which are detailed here. 

Specific GST Provisions for Fortified and Concentrated Milk Products

Fortified toned milk, which is toned milk enriched with essential vitamins such as vitamins A and D, is exempt from GST as per CBIC Circular No. 52/26/2018-GST dated August 9, 2018. This exemption supports public health initiatives by ensuring affordable access to nutritionally enhanced milk products. Fortified toned milk falls under HSN code 0401.

Khoya or mawa is classified as concentrated milk according to F. No. 332/2/2017 – TRU, and it falls under HSN code 0402. As per this classification, khoya/mawa is currently exempt from GST.