In a move aimed at boosting the agriculture and dairy sectors, the Goods and Services Tax (GST) Council has announced significant tax reductions on dairy products, fertilisers, biopesticides, and farm equipment. The decision, taken at the 56th GST Council meeting chaired by Union Finance Minister Nirmala Sitharaman, is expected to ease input costs for farmers and make essential items more affordable for consumers ahead of the festive season.
Among the key announcements:
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Dairy Products: GST on Ultra High Temperature (UHT) milk and paneer has been cut from 5% to nil, making them completely tax-free. GST on condensed milk, butter, ghee, and cheese has been reduced from 12% to 5%.
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Agricultural Machinery: Tax rates on fixed speed diesel engines (up to 15HP), hand pumps, drip irrigation equipment, sprinklers, threshing machines, composting machines, and tractors have been brought down from 12% to 5%. Self-loading agricultural trailers and hand-propelled carts will also benefit from the reduced rate.
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Fertilisers: Key inputs like sulphuric acid, nitric acid, and ammonia will now attract only 5% GST, down from 18%.
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Biopesticides: Commonly used bio-control agents such as Bacillus thuringiensis, Trichoderma variants, Pseudomonas fluorescens, neem-based pesticides, and viral bio-insecticides will see GST reduced from 12% to 5%.
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Tractor Components: GST has been cut from 18% to 5% on essential tractor parts including tyres, tubes, hydraulic pumps, transmission systems, radiators, gearboxes, and brake assemblies.
The new tax rates will come into effect from September 22, 2025.
Industry leaders welcomed the decision. “The reduction in GST rates on dairy products like UHT milk, paneer, butter, and cheese is a significant development for the FMCG and food sectors. It will make essential food items more affordable, particularly in rural and semi-urban markets,” said Devendra Shah, Chairman of Parag Milk Foods Ltd.
He added that the move will also support farmers by boosting demand for dairy products, improving income stability, and encouraging investments in better cattle care and feed. “Over time, this will uplift rural livelihoods, strengthen the economy, and ensure sustainable growth in India’s dairy sector,” Shah noted.
The council’s decision highlights its focus on strengthening rural economies, reducing farm input costs, and making food essentials accessible to consumers.
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