Even though the State government has refused to hike the cost of Nandini milk and milk products marketed by the Karnataka Milk Federation (KMF), the cost of curd, lassi, buttermilk, and paneer is set to increase, following the GST Council’s decision to remove exemption provided to these products.
The GST Council, in its decision during the two-day meeting at Chandigarh on June 28 and June 29, agreed to withdraw GST exemption on specified food items based on the recommendations made by the Group of Ministers on rate rationalisation. It has removed exemption on pre-packaged and pre-labelled retail packs on items including curd, lassi, and buttermilk.
Rollback sought
The KMF, largest operator in dairy and dairy products in the State, is set to increase cost of curd by ₹2.2 per litre, lassi and buttermilk by ₹3.75, and ₹3 per litre, respectively. Paneer will be dearer by ₹15 a kg.
A formal request for rolling back the decision is expected to be made through a memorandum to the government.
As per the initial calculations after the rates were announced on Wednesday, the federation is expecting to pay about ₹22 lakh per day as GST on its total sales of curd, lassi, buttermilk, and paneer. The KMF markets about nine lakh litres of curd, 15,000 litres of lassi, 15,000 litres of buttermilk, and about 5,000 kg of paneer daily. The federation is awaiting notification for a clearer picture.
To customer
KMF sources said that the cost will naturally be passed on to the consumer. Sources also pointed out that in the past when flavoured milk was brought under the GST regime, the KMF had appealed against it stating that it was a milk product, and marketed by a cooperative. “While the case is still being heard in the appropriate authority, we are paying the advance tax. The matter is yet to be settled and the cooperative tag has not worked.”
Slamming the decision to bring certain packaged milk products under the GST fold, Bengaluru Milk Union Ltd. (BAMUL) President Narasimhamurthy said that the State government has been stalling every proposal of the KMF to increase prices in the last three years despite price rise affecting farmers. “If the GST can be passed on to the customer, a moderate price rise in crucial milk products could also be made. On the one hand, farmers are not getting enough for their work, and on the other, unable to increase the price, the balance sheet of the district milk unions have been severely affected. Many district unions are now in the red.”
KMF Managing Director B.C. Sateesh said that the matter is yet to be discussed, and the federation could appeal against removal of exemption. “A decision would be taken after consulting KMF chairman Balachandra Jarkiholi shortly.”
