Hyderabad – The dairy products are about to experience mixed business in the nation during the festive season. The implementation of GST has led to a price hike on several dairy products expensive in the northern states, and the same products would see cheaper price rate in the southern part of the country.
Ghee is an essential product which gets sold during the festival season. Ghee had attracted 5% GST in the north of the country while in the south the same Ghee had attracted 14% VAT.
Now, with the implementation of GST, the scenario has changed and now due to the new tax system, Ghee would attract 12% tax in the entire country. This would mean the tax rate increases in the north by 7% while in the south the rate would see a 2% drop.
Ghee is the second biggest commodity sold in India after milk. Additionally, a third of the sale of ghee gets reported during the festive season. The current scenario has forced dairy dealers to increase the price of a dairy product. This has been done to cover up for the tax increase.
Sterling Argo’s MD has said that the 7% hike in tax rate has been a setback for the dairy makers. He has added that the sale has been affected due to the price hike and the news is not pleasant for business.
However, the dairy sellers of South see the tax rate drop as nothing but a neutral event or somewhat positive for the sale and business. Such a tax implementation might also affect the B2B business model of the nation. The dairy commodity industry relies only on cash transaction while selling ghee. Presently, India is the largest producer of liquid milk.