GST- IMPACT ON INDIAN DAIRY INDUSTRY

Goods and Service Tax- Dairy Industry

Milk contributes close to the 1/3 of gross income of rural families and in the case of these without land, nearly half of their gross income.

Milk is a single agricultural crop that has highest value, more than combined value of wheat and rice. Milk production has show rapid growth of 4 to 4.5% per annum during the last 25 year livestock sector accounts for 28 to 30% of GDP of agriculture.

Milk offers the quality bioavailability of protein, mainly to the vegetarian. Milk is an important nutritional requirement of human beings therefore may also improve the health reputation of the farmer and people at big. Excessive price of milk and milk product shall make it unaffordable to poor strata of society.

The overall market size of the products — butter, tetrapack milk and butter oil is estimated to be around 25,000 crore.

Existing Taxation Regime:

According to the existing taxation regime there is no tax on any of the fresh dairy products like raw milk, pasteurised–packaged milk, dahi, chachh, lassi and their variants. None of the dairy products attract excise duty except for the sterilised-sweetened-flavoured milks that also in a very few states. Mandi fee that once was levied on ghee across India has been abolished except in Uttar Pradesh and Rajasthan and that too has been reduced to 2% only. Value-added tax is levied at 2-5% on milk powders, 5% on chakka (basic raw material for shrikhand), table butter, cream, and UHT milk packed in cartons.

It is widely expected that GST will be an amalgam of VAT, excise duty, octroi, entry tax, mandi fee, cess and so on. 

Under New Taxation (GST):

Milk, Cheese, Egg and Honey falls under HSN code chapter 04 of GST commodity tariff schedule.  The details about GST rate changes for sale of Milk, Cheese, Egg and Honey are being updated here. GST rates in India is being finalized within a couple of months, as Goods and Service Tax is being implemented from July 01,2017 in India.    The GST rates are imposed in India under 4 slabs. 

Nil GST RATE;

1. Fresh milk and pasteurised milk, including separated milk, milk and cream, not concentrated nor containing added sugar or other sweetening matter, excluding Ultra High Temperature (UHT) milk

2. Eggs Birds' eggs, in shell, fresh, preserved or cooked [0407]

3. Curd

4. Lassi

5. Butter milk

6. Chena or paneer, other than put up in unit containers and bearing a registered brand name.

7. Natural honey, other than put up in unit container and bearing a registered brand name.

5% GST RATE;

All goods not specified elsewhere.

 1. Ultra High Temperature (UHT) milk

2. Milk and cream, concentrated or containing added sugar or other sweetening matter including skimmed milk powder, milk food for babies, excluding condensed milk.

3.  Cream, yogurt, kephir and other fermented or acidified milk and cream, whether or not concentrated or containing added sugar or other sweetening matter or flavoured or containing added fruit, nuts or cocoa

4. Whey, whether or not concentrated or containing added sugar or other sweetening matter; products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included.

5. Chena or paneer put up in unit container and bearing a registered brand name .

6. Birds' eggs, not in shell, and egg yolks, fresh, dried, cooked by steaming or by boiling in water, moulded, frozen or otherwise preserved, whether or not containing added sugar or other sweetening matter.

7. Natural honey, put up in unit container and bearing a registered brand name.

 8. Edible products of animal origin, not elsewhere specified or included.

12% GST RATE;

1. Butter and other fats (ghee, butter oil, etc.) and oils derived from milk; dairy spreads

2. Cheese

18% GST RATE;

1. Condensed milk