New Delhi, 6 September 2025 — In a landmark move, the Government of India has announced sweeping reductions in Goods and Services Tax (GST) across key sectors impacting cooperatives, farmers, and rural enterprises, benefiting more than 10 crore dairy farmers nationwide. These reforms are designed to strengthen the cooperative sector, improve the competitiveness of their products, stimulate demand, and increase incomes, particularly for women-led rural enterprises and self-help groups engaged in agriculture and allied activities.
Key Highlights of the GST Reductions
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No GST on milk and paneer, whether branded or unbranded, providing direct relief to dairy farmers and making essential nutrition more affordable.
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GST on butter and ghee reduced from 12% to 5%, benefiting both producers and consumers.
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GST on cooperatives-processed foods like cheese, pasta, namkeens, jams, jellies, fruit pulps, and juice-based drinks has been lowered to 5%, reducing household food expenditures and promoting food processing cooperatives.
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GST on packing materials such as paper, cases, and crates cut to 5%, easing packaging and logistics costs for cooperatives and producers.
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Tractors below 1800 cc and tractor components now attract a reduced GST rate of 5%, making agricultural machinery more affordable.
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GST on key fertilizer inputs like ammonia, sulphuric acid, and nitric acid reduced from 18% to 5%, lowering input costs for fertilizer producers and making fertilizers affordable for farmers.
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GST on twelve bio-pesticides and micronutrients reduced from 12% to 5%, promoting organic and natural farming practices.
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GST on commercial trucks and delivery vans reduced to 18%, lowering freight rates and enhancing export competitiveness.
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GST on third-party insurance for goods carriage cut to 5% with Input Tax Credit, further reducing logistics expenses.
Economic and Social Impact
The reforms will result in significant cost savings for farmers and cooperatives, enhancing rural incomes and promoting sustainable agriculture. Affordable dairy and food products will bolster nutrition security, while the reduction in GST for tractors and farm machinery will accelerate mechanization across small and medium landholdings.
Women’s self-help groups involved in milk processing, handicrafts, and allied rural enterprises will gain from the lowered tax burden, stimulating entrepreneurship and income generation. Lower logistics and packaging costs will improve supply chain efficiency, benefitting farmers engaged in value addition and food processing.
Government Perspective
The government under Prime Minister Shri Narendra Modi envisions these GST reforms as a catalyst for rural empowerment, inclusive growth, and a significant boost to India’s cooperative and agricultural sectors. The reduced costs are expected to increase consumption, strengthen the rural economy, and contribute substantially to India’s broader economic development goals.
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Source: PIB
