GST Backs Dairy Industry; Promotes Growth with 0% Tax on Milk

1. GST BACKS DAIRY INDUSTRY; PROMOTES GROWTH WITH 0% TAX ON MILK It came as a delightful news to the national populace when the Finance Minister Arun Jaitley announced 0% tax on milk while he rolled out the GST (Goods and Services Tax) rates for about 1,211 items under various tax slabs at a media gathering in New Delhi a few days back. The GST is in effect now from July 1. Apart from milk, a huge number of items have either been exempted from the tax or fall under the 5% tax bracket, giving a sigh of relief to the consumers. The GST is said to be common man friendly as claimed by the government and is formulated keeping the people in mind, the majority of whom are either middle class or below. Maximum benefits are aimed to be passed on to the poor and the common man. If the prices on a few items have gone down, there are others on which prices have increased neutralizing the negative impact. While there are various tax slabs ranging from as low as 0% and high up to 40% applicable to different industries, the dairy industry has smoothly implemented the tax reform. Earlier, the cooperatives had to shell out 2% CST which was not applicable to the private companies. It has been pulled back now. The new tax regime has proved largely beneficial to the dairy sector as the cooperatives shall be competing against the private players with equal benefits.

2. The proposed GST might broadly be an amalgamation of VAT (Value Added Tax), excise duty, entry tax, mandi expense, cess, and so forth. No dairy products include excise duty except a few ones and that too not in all the states. Amidst the onset of nationwide reform disseminated by the GST, let’s quickly walk through the amendments instilled, their impact on the dairy sector and how likely it is that the consumers will accept the transition. A few products have seen a dive in their prices. Products like milk, curd, buttermilk, and cottage cheese will be sold tax-free while the prices of others like baby food, dairy whitener, cream, etc. have been reduced which come under a lower slab of 5%. Not all dairy products have seen a plunge in the rates. Ghee (clarified butter) will cost more as it falls under a higher GST slab of 12% while condensed milk will be dearer which is included in 18% tax slab. However, the rates of butter, ice cream, and cheese have remained unchanged due to a marginal increase in the current rates. Dairy farming is a long-standing occupation in India specifically for those laborers who are landless or own a meagre part of the land. These farmers face a direct impact with changes in the milk commodities as it affects their only source of earning which is dairying. Milk production ensures regular earnings as well as food security for small and marginal farmers. Since milk is tax exempt, the rural households will be able to afford milk and ensure nutritional safety, especially for the children. The production of dairy products derived from milk requires setting up highly functioning manufacturing units which need significant capital investment. Soaring prices will make it difficult to produce such expensive products and maintain these plants at a long run if the taxes are increased. With the increase in prices of certain milk items, it is likely that the consumer will tend to decrease the utilization of such derivatives to make ends meet.

3. Closing The government has expressed that GST is an improvised tax system and people will have to adjust to the new culture of paying tax. It has also listed out various advantages for trade, industry, and economy fueled by a simplified tax structure with an aim to create one economic India. There are many facets to which people look at this reform. Though the dairy industry has swiftly integrated the new rates into its system, it has to keep a check on the consumer demands to regulate the supply of its products. Thank you For Reading Follow Us On www.amulamcs.com info@amulamcs.com