The tax cuts are comprehensive and target key areas of the industry. The GST rate on Ultra High Temperature (UHT) milk and paneer has been completely eliminated, dropping from 5% to zero. Additionally, the GST on condensed milk, butter, other fats, and cheese was significantly reduced from 12% to 5%. These cuts directly lower the end-consumer price of popular dairy products, which is expected to stimulate demand and increase sales for dairy companies.

Furthermore, the tax relief extends to the agricultural side of the business, a crucial development for the entire dairy industry. The GST on essential farm inputs, including key fertilizer components like sulphuric acid and ammonia, was slashed from 18% to 5%. The article also highlights that agricultural machinery, from fixed-speed diesel engines to hand pumps and soil preparation tools, will now be taxed at 5% instead of 12%, further reducing operational costs for farmers.

The rally in dairy stocks, including Dodla Dairy and Parag Milk Foods, serves as a clear indicator of the market’s positive response to these reforms. By making dairy products more affordable for consumers and reducing the burden on farmers through lower taxes on inputs and machinery, the government is effectively creating a more favorable economic environment. This is a crucial step towards fostering growth and profitability in the dairy market.