The Kerala Cooperative Milk Marketing Federation (KCMMF), known by its brand name Milma, has demanded rollback of the GST Council’s decision to impose 5% GST on relabelled and repackaged buttermilk, curd, lassi and paneer, and steeply raise the tax on dairy machinery from 12% to 18%.
The decision of the GST Council meeting, held on July 1, will cause severe stress on the country’s dairy sector, which is already strained due to increase in input cost and the pandemic-induced downturn, the KCMMF said in a statement on Wednesday.
“It is rather unfortunate that the decision to bring in more dairy-based products within the GST net has come at a time when the Indian dairy sector is passing through a very hard time due to run-away inflationary pressure on input cost,” said Milma chairman K. S. Mani.
Also, dairy farmers affiliated to cooperatives have been pressing for higher price for milk and demanding supply of inputs such as cattle feed at subsidised rates to offset the soaring production costs, he said.
It is also not clear how the government will be able to enforce tax collection on these items since they are mostly sold by unorganised dairy enterprises, including bakeries, grocery stores and fruits and vegetable markets.
The exchequer may not gain much out of the imposition of GST on these items, as hardly about 10% of them are sold by the organised sector. The revenue collection is not going to be so easy as most of the unorganised players trade within the limit of ₹40 lakh.
Referring to the decision to increase the GST on dairy machinery and milking machines from 12% to 18%, a press note quoting the federation said these machines are essential for producing hygienic milk by small-scale farmers who have no provision for getting the GST credit. This, it said, would adversely impact safe milk production and put the masses to health risks.
