Why is India taxing nutrition? A closer look at the higher GST on ghee vs oils
In the diverse landscape of Indian cuisine, ghee holds a revered position, not just as a culinary staple but as a symbol of tradition and wellness. However, the current taxation framework under the Goods and Services Tax (GST) regime has placed ghee at a disadvantage, imposing a higher tax rate compared to various refined vegetable oils. This disparity raises questions about the alignment of tax policies with nutritional and cultural values.
Nutritional value of ghee vs. refined oils
Ghee, a form of clarified butter, is rich in fat-soluble vitamins A, D, E, and K, and contains butyric acid, known for its anti-inflammatory properties. Its high smoke point makes it suitable for cooking, and it’s free from trans fats commonly found in some refined oils. In contrast, many refined oils undergo extensive processing, which can strip them of natural nutrients and introduce additives.
GST disparity: Ghee vs refined oils
Under the current GST structure, ghee is taxed at 12 per cent, while several refined vegetable oils, such as soybean, sunflower, and palm oil, attract a lower rate of 5 per cent . This discrepancy not only affects consumer choices but also has broader implications for public health and the economy.
Impact on producers and consumers
The higher GST on ghee increases production costs for manufacturers, which are often passed on to consumers. In rural areas, where brand differentiation is minimal, consumers focus on the product type rather than the brand. Consequently, higher prices can deter consumers from purchasing ghee, pushing them towards cheaper, less nutritious alternatives. Moreover, local producers operating outside the formal economy may not adhere to tax regulations, creating an uneven playing field and potentially compromising product quality.
Cultural and ayurvedic significance
Ghee’s importance extends beyond its nutritional profile. In Ayurveda, it is considered a vital component for balancing bodily doshas and enhancing overall well-being. Ghee is believed to aid digestion, improve memory, and lubricate connective tissues. Its role in traditional diets is not merely for taste but for its therapeutic properties, making it an integral part of India’s health and wellness practices.
Calls for policy reassessment
Recognising the need for policy intervention, stakeholders in the dairy industry have raised concerns with governmental bodies, including the Ministry of Agriculture, the Finance Ministry, and the Indian Dairy Association. The aim is to bring attention to the disparity and advocate for a tax structure that supports nutritious, traditional foods.
Dairy industry in promoting healthier food policies
The dairy industry plays a pivotal role in shaping the nation’s nutritional landscape. With a growing emphasis on high-protein diets, especially for the elderly, dairy products like milk and ghee are essential. By promoting and making accessible traditional dairy products, the industry can contribute significantly to public health. However, supportive policies, including equitable taxation, are crucial to enable this contribution.
In conclusion, the current GST structure, which imposes a higher tax on ghee compared to refined oils, raises questions about the alignment of tax policies with public health objectives. As stakeholders advocate for a reevaluation, it becomes imperative for policymakers to consider the nutritional value, cultural significance, and economic impact of such taxation. Aligning tax policies with health and tradition can pave the way for a healthier, more equitable society.
Saluja is Director, Sterling Agro Industries Ltd and Sodhi is India Dairy Association
Published on June 8, 2025
