GST Rate Cuts: A Game-Changer for Women Entrepreneurs and Small Businesses

She Business Time
Sep 16, 2025
3 min read

India’s Goods and Services Tax (GST) is not just about compliance—it can be a growth booster when rates are reduced. For women entrepreneurs and small businesses, GST rate cuts mean lower costs, higher margins, better cash flow, and more affordability for customers.

Let’s look at how GST rate cuts directly help, with real-life examples and cost calculations—including the important sector of milk and dairy products, where many women play a key entrepreneurial role.

1. Lowering Operational Costs

Reduced GST on raw materials lowers business expenses and frees up resources.

Example: A boutique run by a woman entrepreneur

Raw fabric purchase = ₹10,000.
At 18% GST → ₹11,800.
At 12% GST → ₹11,200.

👉 Saving = ₹600 per purchase, or ₹30,000 annually on ₹5,00,000 worth of supplies.

2. Milk and Dairy Products: Everyday Relief for Women Entrepreneurs

Women across India run dairies, sweet shops, bakeries, and home-based food ventures where milk and milk-based products are key ingredients. Lower GST here benefits both producers and consumers.

Example: A woman running a sweets shop (milk-based sweets like rasgulla, peda, gulab jamun):

Raw material cost (milk, sugar, etc.) = ₹50,000.
At 12% GST → ₹56,000.
At 5% GST → ₹52,500.

👉 Direct savings of ₹3,500 per batch. If she makes 10 such batches a month, she saves ₹35,000 monthly.

This saving can help her:

Keep prices affordable for customers.
Increase competitiveness against larger sweet chains.
Reinvest in better packaging or marketing.

Example: A woman running a dairy-based packaged products business

1,000 liters of flavored milk @ ₹50 per liter = ₹50,000.
With 12% GST → Customer price = ₹56,000.
With 5% GST → Customer price = ₹52,500.

👉 Customers save ₹3,500, making her product more attractive in a price-sensitive market.

3. Making Products More Affordable for Customers

Affordability is crucial for small businesses. Lower GST on milk products means consumers buy more, helping women-led businesses scale.

Example: A home-based catering service using paneer (cottage cheese):

Paneer price = ₹400/kg.
With 12% GST → ₹448/kg.
With 5% GST → ₹420/kg.

👉 Savings of ₹28 per kg. If she uses 100 kg per month, that’s ₹2,800 saved, either passed on to customers or kept as higher margins.

4. Boosting Profit Margins for Small Businesses

Every rupee saved matters for women-led MSMEs. Lower GST rates increase margins without hiking prices.

Example: A woman running a bakery using butter, cream, and milk-based ingredients:

Total monthly ingredients = ₹1,00,000.
GST @ 12% → ₹1,12,000.
GST @ 5% → ₹1,05,000.

👉 Saving = ₹7,000 per month, or ₹84,000 per year.

This could fund new baking equipment, packaging upgrades, or digital marketing.

5. Reducing Working Capital Burden

High GST ties up cash as Input Tax Credit (ITC). Lower rates ease liquidity issues.

Example: A woman selling packaged curd and yogurt in bulk:

Monthly purchase = ₹2,00,000.
At 12% GST → ₹24,000 blocked in ITC.
At 5% GST → ₹10,000 blocked.

👉 Liquidity freed = ₹14,000 monthly, which can pay workers’ wages or fund raw materials.

6. Encouraging Market Expansion and Exports

Indian dairy-based sweets and milk products are in demand abroad. Lower GST reduces upfront costs, making exports easier for small women-led enterprises.

Example: Exporting 500 kg of ghee:

Base price = ₹500/kg = ₹2,50,000.
At 12% GST → ₹2,80,000 working capital required.
At 5% GST → ₹2,62,500.

👉 Difference = ₹17,500 less upfront capital needed per export batch.

Conclusion

GST rate cuts on milk and dairy products—and on other raw materials and services—are not just numbers. They are lifelines for women entrepreneurs and small businesses, helping reduce costs, improve cash flow, and boost affordability.

From a sweet shop owner in a small town to a woman selling packaged dairy products online, lower GST ensures women can compete fairly, expand confidently, and contribute to India’s economic growth.

✨ Every rate cut is more than tax relief—it’s an investment in women’s economic empowerment.