GST on Flavoured Milk What Dairy Businesses Must Know
Is GST on flavoured milk confusing you? You’re not alone. Dairy players across India want a clear 5% GST, matching curd and lassi rates. Let’s break this down with official updates and court references.
How GST Currently Treats Flavoured Milk
- No explicit rate in the GST Tariff: Unlike plain milk (nil) or lassi (5%).
- Many officers treat it as beverage with 12% or 18% GST.
- This leads to notices, disputes and higher costs for dairies.
Legal References
- CBIC Clarification (F.No.332/2/2017-TRU): Flavoured milk is milk with added flavours, not a beverage.
- Karnataka High Court in M/s Karnataka Co-operative Milk Producers Federation Ltd.: Held that flavoured milk is classifiable as milk, attracting NIL or 5% as ‘milk products’.
- GST Council Meetings: Industry has repeatedly sought a clear 5% notification.
Industry’s Stand: Fix GST at 5%
Why 5% GST makes sense:
- Matches lassi, curd, butter milk rates.
- Supports affordable pricing.
- Removes litigation risk.
- Boosts compliance and reduces harassment.
Comparison Table: Current vs Proposed GST
| Product | Current GST | Proposed GST |
|---|---|---|
| Plain Milk | NIL | NIL |
| Lassi / Butter Milk | 5% | 5% |
| Flavoured Milk | 12% / 18% (disputed) | 5% (industry demand) |
Expert Tip
Consult your tax advisor and, if facing demand notices, refer to CBIC’s clarification and relevant High Court rulings. Filing a representation through your association can help get relief faster.
FAQs
Q1. Is flavoured milk exempt under GST?
No. Unlike plain milk, flavoured milk is not exempt. It’s taxed unless clarified as milk product.
Q2. What is the current risk for dairies?
Assessments, show-cause notices, and higher taxes for treating it as aerated beverage.
Q3. What should taxpayers do?
Check the latest clarifications, maintain proper classification, and claim appropriate rates in returns.
Final Thoughts & How Efiletax Helps
A consistent 5% GST on flavoured milk will avoid confusion and promote fair pricing. Until CBIC notifies this, businesses must stay alert.
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Summary
GST on flavoured milk confuses dairies due to conflicting rates. CBIC clarifies it as milk with added flavours, but no specific rate notification exists. Courts favour 5% GST like lassi and curd. Industry urges the government to issue clear directions. Learn how to comply with Efiletax.