The Ministry of Cooperation on December 10, 2025, notified regarding the Impact of GST rate rationalisation on cooperative societies.
The recent GST rationalisation is expected to significantly benefit cooperative societies operating in the dairy, food processing, agriculture, and rural enterprise sectors.
Dairy Sector
GST on key dairy items has been reduced—milk and cheese to 0%, and butter, ghee, packaged milk, and similar products from 12% to 5%. This is expected to make dairy products more competitive, boost consumer demand, and increase the revenue of dairy cooperatives, ultimately benefiting dairy farmers.
Food Processing Sector
GST on most processed food items—such as jams, jellies, fruit pulp, beverages, chocolates, cereals, ice cream, pastries, cakes, and biscuits—has been reduced to 5% (from 12–18%). Lower tax rates are anticipated to stimulate demand, thereby increasing the revenue of cooperatives in this sector.
Agriculture & Rural Enterprises
GST on key fertilizer inputs (ammonia, sulfuric acid, nitric acid), various biopesticides, micronutrients, and tractors below 1800 cc, as well as tractor components, has been reduced to 5%. This will lower input costs, reduce fertilizer prices, ensure timely availability of affordable inputs, and promote the shift toward organic pesticides. The changes will directly benefit small farmers and Farmer Producer Organizations (FPOs).
Overall Impact on Cooperatives
The rationalisation is expected to:
• Increase competitiveness and market share of cooperative products.
• Improve consumer trust and strengthen food security.
• Enhance margins and enable cooperatives to pass higher procurement prices to members (e.g., dairy farmers may now receive ~85% of consumer prices, up from 80%).
• Boost demand and encourage informal producers and women-led Self Help Groups (SHGs) to join cooperatives, improving their market access and income opportunities nationwide.
[Release ID: 2201776]
