Untaxing Tradition: A Dairy Sector Plea to Rationalise GST on Ghee and Butter

India’s dairy sector is making a strong appeal to the GST Council to reduce GST on ghee and butter from 12% to 5%. Drawing from historical tax rates, international comparisons, and industry voices, the article underscores how the 12% GST distorts market fairness, promotes adulteration, hurts rural livelihoods, and undermines formalisation.

Leading dairy voices such as Mr. R.S. Sodhi (Indian Dairy Association), Rahul Kumar (Parag Milk Foods), Ravin Saluja (Nova Dairy), Sandeep Aggarwal (SMC Foods) and Rajender Singh (Paras Dairy) are expected to weigh in, as the article leaves space for their inputs ahead of the upcoming GST Council meeting.

Comparative global benchmarks from the EU, US, and New Zealand show that dairy fats like butter are either zero-rated or taxed at much lower rates, reinforcing the need for India to align with both international norms and domestic nutrition priorities.

Rationalising GST to 5% is not just good economics — it’s essential for public health, farmer incomes, and long-term tax compliance.