GST Rate Cuts on Dairy, Biscuits & Restaurants – GST Council 56th Meeting 2025

 

GST Rate Cuts on Dairy, Biscuits & Restaurants – 56th GST Council Meeting

The 56th GST Council Meeting, held on 3rd September 2025, has been termed a “consumer-friendly budget for food.” From dairy products like milk and cheese to everyday packaged foods like biscuits, chocolates, and cakes, the Council announced historic GST rate cuts effective from 22nd September 2025.

The meeting also issued clarifications for the restaurant sector, ensuring fair tax treatment across dine-in and takeaway services. Let’s explore the full list of food & dairy-related GST changes.

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🥛 GST Cuts on Dairy Products

1. UHT Milk

   • Old GST Rate: 5%
   • New GST Rate: Nil
     ✅ Direct relief for households and dairy buyers.

2. Paneer (packaged)

   • Old GST Rate: 5%
   • New GST Rate: Nil

3. Cheese & Butter

   • Old GST Rate: 12%
   • New GST Rate: 5%
     ✅ Dairy-based FMCG products will now be cheaper.

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🍫 GST Cuts on Packaged Foods

1. Chocolates & Cocoa Products

   • Old Rate: 18%
   • New Rate: 5%

2. Biscuits, Cakes & Pastries

   • Old Rate: 18%
   • New Rate: 5%
     ✅ Relief for bakeries, sweet shops, and FMCG brands.

3. Soft Drinks & Beverages

   • Some non-alcoholic drinks have shifted from 18% → 12%.
   • Aerated drinks remain taxed at 28% + cess.

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🍽️ GST on Restaurants & Food Services

• Standalone Restaurants

  • Clarification issued: standalone restaurants cannot classify as “specified premises” to claim 18% GST with ITC.
  • They remain under 5% GST without ITC.

• Hotel Restaurants (room tariff > ₹7,500)

  • Continue to be taxed at 18% with ITC.

✅ This ensures fair tax rules for both dine-in restaurants and food delivery services.

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📉 Impact on Food & Dairy Industry

• Consumers: Prices of daily food items like milk, paneer, cheese, chocolates, biscuits, and butter will drop from late September.
• Dairy Farmers & Co-ops: Lower GST will push higher demand for packaged dairy products.
• FMCG Companies: Biscuit and chocolate makers get a big boost in demand.
• Restaurants: Clarity on ITC rules ensures stable pricing for dine-in and delivery food services.

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FAQs on Food & Dairy GST Cuts

Q1. From when will the new GST rates apply?
All changes in food & dairy GST rates will apply from 22nd September 2025.

Q2. What is the GST rate on milk now?
UHT milk and packaged paneer will now be exempt from GST (Nil).

Q3. What is the GST rate on biscuits and chocolates?
Biscuits, cakes, and chocolates will now attract 5% GST instead of 18%.

Q4. What about restaurant GST?
Standalone restaurants remain under 5% GST without ITC, while hotel restaurants above ₹7,500 room tariff are taxed at 18% with ITC.

Q5. How does this benefit consumers?
Everyday items like biscuits, chocolates, cheese, and milk will get cheaper, while dining-out tax rules are now clearer.

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