Ice Cream Makers Request GST Relief, Ask to give then same treatment as dairy products

The Indian Ice Cream Manufacturers’ Association (IICMA) has asked the government to reduce the tax on ice cream from 18% to 5%.

In a meeting with Finance Minister Nirmala Sitharaman, IICMA said ice cream should not be taxed higher than similar dairy products. Milk-based sweets are only taxed at 5% and flavoured milk at 5% or 12%, even though they have almost the same ingredients as ice cream.

Led by Sudhir Shah, IICMA told the finance ministry that the high 18% tax makes ice cream seem like a luxury item, reduces sales, and leads to tax cheating. The government currently collects about Rs. 3,600 crore yearly in taxes from ice cream sales.

Making Ice Cream Affordable

IICMA argued that ice cream is not a luxury because over 80% of ice cream in India costs less than Rs. 30 per serving. Many products cost just Rs. 5 or Rs. 10, even in rural areas. The “luxury” image comes from fancy ice cream shops that charge for atmosphere more than the ice cream itself.

The association warned that keeping the 18% tax hurts both makers and buyers, especially smaller companies serving regular people. They believe lowering the tax could increase sales and reduce tax evasion, which would make up for any tax money lost.

Ice Cream as Nutrition

IICMA also said ice cream provides important nutrients like proteins and fats, especially for children and undernourished people. They said it shouldn’t be seen just as a treat but as nutritious food.

The industry mentioned that ice cream has mental benefits too, noting how popular it is during very hot or cold weather. They linked lower taxes to both economic and health benefits.

Money Impact

Based on a 2021 recommendation, ice cream sold in parlors must have an 18% tax. IICMA said reducing it to 5% would cause about Rs. 2,600 crore in lost tax money. However, they believe more sales and less tax cheating would make up much of this loss over time.

As the government thinks about budget plans and tax categories, IICMA’s plea might restart talks about what should be considered a luxury in India’s changing consumer market.