GST confers Goods and Services Tax. It is a uniform tax applicable to the whole of India. It is an indirect tax that replaces the value-added tax (VAT), purchase tax, service tax, excise duty, etc. The new GST rates were announced by Union Finance Minister Nirmala Sitharaman, and the hiked rates came into force on the 18th of July 2022. Earlier, the Dairy products were exempt from the GST rate list. But after the 47th meeting of the GST Council, the GST rates were imposed on dairy products from nil. The GST rates were increase on the machinery utilised in the dairy product companies. In this blog, we have discussed the GST rates of dairy products, their effect on consumers, farmers, etc.
What is the GST Rate for Dairy products?
The Diary products are subject to GST at 5% compared to their prior exempt status. According to the Legal Metrology Act, the purview of the hiked tax will be imposed on the pre-packed and pre-labelled retail packs, i.e., pre-packed and pre-labelled curd, buttermilk, lassi, etc. According to the research, curd, along with lassi, constitutes about 15 – 25% of the revenue of dairy products companies. The GST imposed will be a game changer for these dairy product companies.
What will be the effect of such hiked tax?
The imposed GST will hike the price of dairy products. The cost of the curd will be raised by about Rs. 3 – 4 per litre. Some dairy products companies will absorb the GST rates; on the other hand, some others will increase the price of their products. If the cost of dairy products is not increase, the businesses will render losses in their sales. This move has enabled the dairy companies to increase the prices of their products to absorb the effect of the hiked tax. It will give rise to the irrational competitive pressures and miseries of the middle-class society of India.
What is the effect of the GST rise of dairy products on the farmers?
Dairy Product companies have increased the prices of their products. The dairy farmers are not accepting the situation. The GST increased rates have created misery for the dairy farmers. Uttar Pradesh is the highest milk producer in India. The dairy farmers have expressed their concerns about the increasing prices and have requested the government to revise the said decision.
Which dairy products is GST free?
Apart from the revised rate levied on dairy products, some are GST-free. In the case of Ghee, flavoured milk, etc., the GST Council has not yet imposed taxes on these products, but in the future, these might come under the radar of the GST. Other dairy products like butter, cheese, paneer, etc., already attract GST.
The ordinary citizen has had enough of the levied GST on essential commodities, and so have the dairy companies. The best advice and solutions to the taxation for businesses can be solved with a click. We at Taxkundali help our clients in the problem-solving of their companies. We offer straightforward answers to complex taxation, audit, investment, etc., issues.