Contrary to the widespread misunderstanding, the new tax reforms announced by Finance Minister Nirmala Sitharaman will only affect Ultra-High Temperature (UHT) processed milk. The GST rate on this long-life milk, often sold in aseptic packaging like Tetra Paks, has been reduced from 5% to a new rate of zero percent. This change is the sole reason for any anticipated price reduction in the dairy sector, providing a direct benefit to consumers who purchase UHT products.

The new GST measures, unveiled during the 56th GST Council meeting, are part of a broader “Next-Gen GST Reform” aimed at simplifying the tax structure and reducing costs for the public. The government has decided to consolidate tax rates into two main slabs: 5% and 18%, by eliminating the existing 12% and 28% rates. This move is positioned as a significant reform for the Indian economy and is expected to positively impact households, farmers, and businesses.

The reform’s impact on the dairy industry highlights the difference in tax treatment between fresh and processed milk products. While fresh pouch milk remains untaxed, the recent decision to eliminate the GST on UHT milk makes this long-shelf-life product more accessible and affordable. This change in taxation could potentially boost the consumption of UHT milk, an increasingly popular option for its convenience and longevity without the need for refrigeration.