GST 2.0 & Mother Dairy: What Consumers Must Know About the Price Cuts

From September 22, 2025, Mother Dairy declared that the prices of several dairy and processed products will come down: milk in tetra packs, butter, cheese, ghee, etc., thanks to the new “GST 2.0” reforms. The company says it is “passing 100% of the tax benefit” to consumers. 

But what exactly is this reform? 

Which products are cheaper, by how much, and what does it mean for farmers, processed‐food supply chain, and consumers? This article dives into the details, with examples and implications.

What is GST 2.0 and What Changed?

GST 2.0 refers to the latest set of Goods & Services Tax (GST) reforms effected from September 22, 2025. The key aim is to rationalize rates, move many items into lower slabs or exemption, and simplify the GST burden, particularly for food, dairy, and processed goods.

• One central change is that many products which earlier attracted 12% GST are now moved to 5% or zero/exempt level.
   
• Packaged dairy items and processed foods under brands like Mother Dairy & Safal are among those covered under this reform.
   
• Besides benefiting consumers via lower retail prices, the reform is designed to help farmers / producers via higher demand, and reduce costs along the supply chain (packaging, allied equipment etc.) due to lower GST burden.

Price Cuts at Mother Dairy: What Gets Cheaper & By How Much

Mother Dairy has publicly announced that effective September 22, 2025, it will pass on 100% of the tax benefit to consumers. Below are some specific examples of products and how their prices will change.

Read More –Types Of GST Returns: GSTR-1, GSTR-3B, GSTR-4 & More Explained

Here is a table summarizing select items and their price reductions:
 

Note: Prices quoted are approximate averages from Mother Dairy announcements; actual depend on location, packaging etc.

After reviewing the table, we can conclude that:

• Most products formerly taxed at 12% will now carry 5% or be exempt.
   
• Consumers will see minor but meaningful savings, especially for high-volume or daily items (milk, butter, ghee). For example, ₹30 off ghee is substantial since ghee is used regularly.
   
• Items like milk (tetra pack) move to zero / exempt status, making them significantly cheaper (though full cream / poly-pack milks were already exempt).

Which Products Are Newly Exempt vs Lowered Slab & What That Means

Beyond the price list, it's useful to see which product categories are moving between slabs and what that implies for cost, demand, and farmers / producers.

• Milk tetra packs: Now GST exempt (zero), meaning full relief of GST component for these.
   
• Butter, ghee, cheese, milkshakes under Mother Dairy and Safal: Moved from 12% to 5%.
   
• Safal Brand processed foods (nuggets, French fries, jam, tomato puree etc.): Also subject to rate cuts, many items will see price dips of ₹5-₹15 depending on weight/pack size.
   
• Poly-pack milk (full cream, toned etc.) has always been exempt, so no change for those.
   

Implications:

• For products now in lower slab or exempt, cost of production & taxation on input materials may also fall, depending on how upstream supply chains are taxed.
   
• Lower GST on dairy/packaged processed foods is likely to reduce the end price, which may encourage more packaged product consumption.
   
• Producers and processors may see thinner margins if they do not pass full benefit, but Mother Dairy’s announcement commits full pass-through.

Learn More - GST on Dairy Products – Updated Tax Rates & Guide

Consumer Impact: Savings, Affordability, and Behavior

For consumers, especially in urban and semi-urban areas:

• While a ₹2 saving on 1-litre milk tetra pack may not sound huge, over months or for large families, savings accumulate. Similarly, ₹30 less for ghee or ₹10 off cheese slices can relieve budget pressure.
   
• Cheaper processed / packaged foods may shift consumption patterns—people may buy more of these products instead of unbranded or loose equivalents, provided quality perception is good.
   
• Affordability improvements may also increase consumption of dairy products, benefiting farmer incomes (if demand rises) and helping in better nutrition.

However, the effectiveness depends on how uniformly these price cuts reach consumers (in small towns, rural areas, etc.) and whether other cost increases (transport, packaging inflation etc.) offset some of the benefits.

Implication for Farmers, Supply Chain and Dairy Sector

The GST change does not just help consumers. There are several upstream effects:

• Increased demand for packaged dairy could boost procurement from farmers, providing them more stable income. Mother Dairy has stated that farmers will benefit.
   
• Lower GST on allied equipment (packaging, etc.) and on the processed food chain will reduce input costs for producers.
   
• Processors and distributors may need to adjust pricing, packaging, operations to deliver the benefit. Cost cuts in tax may allow reinvestment into cold chains, logistics, etc.
   
• Potential competition: brands that do not pass the full tax benefit may lose market share to those that do.

Potential Challenges & What to Watch Out For

While the reform and Mother Dairy’s moves are positive, there are some things to keep in mind.

• Retailer margin squeeze: If retailers do not get adjusted purchase costs quickly, or if they retain older inventory bought at higher tax, consumers may not get full benefit immediately.
   
• Inflation / cost pressures elsewhere: Transport, raw feed for dairy, labour, fuel etc.,could rise and dampen net gains.
   
• Quality & supply consistency: Lower price is attractive only if quality, packaging, food safety etc. are maintained.
   
• Awareness: Some consumers may not realize the price changes immediately; communication is key.

Conclusion

The “GST 2.0” reforms effective from September 22, 2025, especially as implemented by Mother Dairy and Safal, are a meaningful win for consumers: lower GST rates or zero for many dairy and processed food products, leading to savings of a few rupees up to ₹30 in many cases. Beyond pocket savings, the reforms have the potential to boost demand, help farmers, improve supply chain efficiency, and encourage more packaged dairy consumption.

However, the real benefits will depend on full pass-through of the tax savings, stable input costs, and how pricing gets adjusted across rural and urban retail networks. For consumers, keeping an eye on actual shelf prices, quality, and offers will be important to ensure one gets the advantage promised under GST 2.0.