The government clarified in July of this year that fresh milk and pasteurised milk are completely exempt from Goods and Services Tax (GST). However, a nominal 5% GST applies to pre-packaged and labelled curd, lassi, buttermilk, and paneer, as well as Ultra High-Temperature Milk.
What about flavoured milk, though? Is it simply milk or a beverage, or will it incur 5% GST if sold in pre-packaged form? An Appellate Authority of Advance Ruling (AAAR) has determined that flavoured milk is not milk, but rather a milk-containing beverage.
Following the ice cream manufacturer Vadilal’s request for clarification on the matter, the supreme appellate court stated that compared to pre-packaged milk, flavoured milk is subject to a higher rate of 12 percent GST.
The Gujarat AAAR upheld the AAR’s classification decision and stated that flavoured milk is not milk but a milk-containing beverage. It ruled that such milk is not in its natural state, but rather was produced through the application of specific processes to milk.