Hyderabad, June 12: Dairy stakeholders in Telangana are urging the state government and GST Council to address inconsistencies in the Goods and Services Tax (GST) classification of flavoured milk—a value-added dairy product central to local livelihoods and expanding consumer markets.
Led by K. Balakrishna Reddy, Secretary of the Indian Dairy Association and Head of Operations at Dodla Dairy, the delegation submitted a formal representation to Telangana’s Commercial Taxes Commissioner, Ms. K Haritha. They requested official endorsement for placing flavoured milk squarely under the 5% GST category, consistent with judicial precedent and industry standards.
Tax Confusion Fuels Supply Chain and Legal Risks
While recent High Court rulings support the classification of flavoured milk under HSN 0402 (as a dairy product), ambiguity persists. This regulatory inconsistency, industry leaders warned, not only triggers legal uncertainty but also threatens operational efficiency and affordability.
“The dairy sector is vital to rural economies. Any misclassification of value-added products like flavoured milk under higher GST slabs disrupts pricing, procurement, and consumer access,” the delegation said in a written statement.
Parallel Concerns Across Indian States
Similar appeals have emerged from dairy associations in Gujarat, Punjab, and Maharashtra, where cooperatives such as Amul and Warana have raised parallel GST classification issues. In Tamil Nadu and Karnataka, dairy processors have raised concerns over the inconsistent tax treatment of value-added dairy products, including yoghurt drinks, milkshakes, and probiotic beverages.
GST Clarity Tied to Broader Trade and Policy Challenges
This domestic issue intersects with broader international tensions. India’s ongoing dairy trade friction with the United States—where American firms seek market access amid WTO dairy disputes—adds a layer of complexity. If GST remains ambiguous on products like flavoured milk, India’s stance in digital trade negotiations and tariff talks with the US, China, and the EU could be weakened.
Moreover, the global supply chain—already strained by rare earth metal dependencies and shifting trade alignments post the US-China tariff truce—could see further volatility if essential agricultural and dairy products face classification confusion.
Government Response
Commissioner Haritha assured the delegation that the matter would be reviewed in consultation with central authorities. A formal notification, if issued, would align Telangana with the broader GST council consensus and potentially set a precedent for other states.
