Key Takeaways
- Food items like UHT milk, paneer/chena, breads like paratha/parotta, khakhra, chapati/roti, pizza bread exempted from GST.
- GST on packaged food/snacks, chocolates, sauces, juices, coffee, etc. reduced to 5%, boosting demand and industry growth.
- Packaging materials like crates and paper now taxed at 5%, lowering logistics and production costs.
- GST on trucks and goods vehicles cut from 28% to 18%, reducing freight rates and strengthening supply chains.
Introduction
In the 56th Meeting of the Goods and Services Tax (GST) Council on September 3, 2025, the government has aimed to simplify taxation in the food processing industry by bringing most food items under the 5% or NIL tax slab. This framework promotes uniformity, transparency, and ease of compliance for businesses, while reducing the scope for disputes as certain confusion arose due to classification issues, where products with similar ingredients were placed under different tax slabs. This often led to disputes, litigation, and uncertainty for both industry and consumers. At the same time, it also provides price relief to consumers, as seen in the exemption of staple Indian breads like Paratha, Parotta, and Roti from GST, reflecting their status as essential household foods.
Government Initiatives for Ensuring Food Accessibility and Affordability in India
The Government of India ensures food security primarily through the National Food Security Act (NFSA), which entitles up to 75% of the rural population and 50% of the urban population to receive highly subsidized food grains via the Targeted Public Distribution System. The Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) continues to strengthen this coverage by providing free food grains to over 81.35 crore beneficiaries (as of June 27, 2025), with the scheme extended for five years from January 2024. Additionally, the government uses initiatives like the Price Stabilization Fund and subsidized sale of staples such as Bharat Dal and Bharat Rice to control price volatility and make essential food items affordable.
Major Food Items with GST Reduction
| Item Category | Previous GST | New GST |
| Ultra-High Temperature (UHT) milk | 5% | Nil |
| Pre-packaged & labelled chena/paneer | 5% | Nil |
| Pizza bread, khakhra, chapati/roti | 5% | Nil |
| Paratha, parotta | 18% | Nil |
| Packaged food items & snacks like namkeens, bhujia, mixture, batters, instant noodles, pasta, macaroni, spaghetti, lasagna, ravioli, gnocchi etc. | 12% | 5% |
| Tender coconut water, pre-packaged and labelled | 12% | 5% |
| Drinking Water (20 litre bottles) | 12% | 5% |
| Sauces and condiments like curry paste, mayonnaise, mixed condiments | 12% | 5% |
| All goods, including refined sugar containing added flavouring or colouring matter, sugar cubes; Sugar boiled confectionery | 12% | 5% |
| Brazil nuts (dried) | 12% | 5% |
| Other nuts (dried) such as almonds, hazelnuts or filberts, chestnuts, pistachios, macadamia nuts, kola nuts, pine nuts | 12% | 5% |
| Dates, figs, pineapples, avocados, guavas, mangoes (other than mangoes sliced, dried) | 12% | 5% |
| Roasted chicory and other roasted coffee substitutes (extracts/essences/concentrates) | 12% | 5% |
| Butter, ghee & other dairy fats | 12% | 5% |
| Preserved & processed meat/fish, like sausages, prepared/preserved meat, fish, crustaceans | 12% | 5% |
| Condensed milk, cheese | 12% | 5% |
| Jams, jellies, marmalades, purees, nut pastes | 12% | 5% |
| Preserved vegetables and pickles | 12% | 5% |
| Fruit & vegetable juices/drinks like fruit pulp juices, nut juices, vegetable juice | 12% | 5% |
| Beverages containing milk, soya milk | 12% | 5% |
| Ice cream and edible ice | 18% | 5% |
| Plant-based milk drinks | 18% | 5% |
| Soups and broths and preparations therefor | 18% | 5% |
| Tea and Coffee (extracts/essences/concentrates) | 18% | 5% |
| Chocolates & cocoa products (butter, powder) | 18% | 5% |
| Vegetable saps and extracts | 18% | 5% |
| Sugar confectionery; Pastry, cakes, biscuits and other bakers’ wares | 18% | 5% |
Reduction of GST on food items to 5% or NIL benefits not only consumers but every stakeholder in the food processing value chain — from farmers and cooperatives to MSMEs, retailers, and exporters:
- Lowers household expenditure on dairy and snack products.
- Provides a boost to India’s food processing industries, milk cooperatives, and private dairies.
- Encourages demand in semi-urban and rural areas, supporting MSMEs and regional brands.
- Supports large confectionery plants as well as small-scale producers.
- Reduces input costs and boosts production volumes.
Reduction in Packaging Costs
Packing Paper, Packing Cases, and Crates: GST Reduced to 5%.
- Reduces overall logistics and packaging costs, directly lowering consumer prices.
- Provides relief to food processing units and small manufacturers dependent on cost-effective packaging solutions.
Support to Transportation and Logistics Sector
Commercial Goods Vehicles (Trucks, Delivery Vans, etc.) – GST reduced from 28% to 18%
- Trucks form the backbone of India’s supply chain, carrying nearly 65%–70% of goods traffic.
- Lower GST will reduce the capital cost of trucks, which will directly decrease freight rates per tonne-km.
- This has a cascading effect, bringing down the cost of transporting agricultural goods, cement, steel, FMCG products, and e-commerce deliveries.
- This will further help in controlling inflationary pressures by reducing logistics expenses across sectors.
- A large share of India’s transport sector comprises MSME truck owners who will also benefit directly from reduced costs.
- Lower logistics costs will strengthen India’s position in global supply chains.
- The reforms support the objectives of PM Gati Shakti and the National Logistics Policy.
Additionally, the reduction of GST on third-party insurance of goods carriages (from 12% to 5% with ITC) further complements these efforts.
Conclusion
The recent GST reforms in the food processing and logistics sectors ensure affordability for consumers, predictability for industry players, and competitiveness for India’s economy. By reducing rates on essential food items, packaging materials, and transport vehicles, the Government has not only simplified taxation but also laid a strong foundation for sustainable growth in food processing, logistics, and allied industries.
The Press Release can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/09/Empowering-Food-Processing-and-Logistics-through-GST-Reforms.pdf
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