India’s GST Council has implemented major changes in September 2025, making fresh milk and paneer GST-free nationwide. These reforms expand access to affordable dairy for millions, promote cottage industries, and ensure essential nutrition is cheaper for all households.
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What Has Changed Under GST 2.0?
At the 56th GST Council meeting, key food items were shifted to the nil GST (0%) category—especially ultra-high temperature (UHT) milk, pre-packaged and labelled paneer (chena), and traditional breads.
Previous GST Rate: 5% for UHT milk and packaged paneer.
New GST Rate: 0% (fully tax-free).
Unpacked and unlabeled milk and paneer were already exempt; now tax exemption covers packaged products too.
Cheese, butter, and ghee have seen rates slashed from 12% to 5%.
Why Was GST Removed for Milk and Paneer?
The exemption aims to:
Reduce household costs, increasing affordability for the middle class and rural India.
Support farmers, small dairy producers, and the Indian cottage cheese sector.
Promote healthy diets by making essential protein sources cheaper.
Simplify GST compliance for small businesses and homegrown brands.
Impact on Consumers and Farmers
Packaged paneer and UHT milk are now ₹3–₹4 cheaper per pack, benefiting household budgets.
Farmers and small businesses could see increased demand, improved margins, and more opportunities in organized trade.
Indian breads like chapati, paratha, and naan are also GST-free, further reducing food costs.
Conclusion
The government’s latest GST reforms mark a significant win for consumers and the dairy sector, making milk and paneer more accessible, affordable, and supporting farm livelihoods—all while simplifying taxation for producers.
FAQ About paneer, Milk GST Free in 2025
Q1: Is all milk GST-free now?
A: Yes, all fresh milk—including UHT varieties—is now GST-exempt in India.
Q2: What about paneer?
A: All forms of paneer (chena), whether unpackaged or pre-packaged/labelled, are tax-free under GST 2.0.
Q3: Are other dairy products tax-free?
A: Butter, ghee, and cheese are not tax-free but have seen rates reduced from 12% to 5%.
Q4: Will prices drop in stores?
A: Yes, packaged milk and paneer should become ₹3–₹4 cheaper, on average, reflecting the tax exemption.
Q5: Why did the government make this change?
A: The move aims to make nutrition and household staples affordable, help rural producers, and modernize India’s tax system.
