Currently, plain milk, curd, lassi, and buttermilk are all subject to a 5% GST, a rate that acknowledges their status as essential food items. However, the classification of flavored milk has become a point of contention. Dairy manufacturers assert that flavored milk, despite its added ingredients, fundamentally remains a dairy product and should benefit from the same preferential tax treatment. This inconsistency in taxation not only complicates compliance for dairy companies but also potentially leads to higher retail prices, which could dampen consumer demand for a popular and nutritious beverage.

The lack of a clear directive from the GST Council has led to considerable uncertainty and disputes between dairy companies and tax authorities. This ambiguity translates into legal battles and financial penalties, diverting resources that could otherwise be invested in product innovation, infrastructure development, and market expansion. For the international dairy community observing India’s burgeoning market, this regulatory friction highlights the complexities of navigating diverse tax landscapes and the critical need for transparent and consistent policies to foster industry growth.

Industry representatives emphasize that a uniform 5% GST on flavored milk would not only streamline tax compliance but also make the product more accessible to a wider consumer base. This move could stimulate demand, benefiting dairy farmers through increased procurement and processors through higher sales volumes. Furthermore, it aligns with public health goals by promoting the consumption of nutrient-rich dairy products, particularly among younger demographics who often prefer flavored options.