The present study primarily is an attempt to establish a technique on the disposal scheme for the wastewater coming out as an effluent from milk industries with proper environmental guides and regulations. Apart from the wastewater treatment methodology development, the present work mainly focuses on the attainment of high value product, such as the production of galactosyl-oligosaccharide (GOS) in batch reactor and as well as in recycle membrane reactor after hydrolyzing recovered lactose from the whey stream with beta-galactosidase enzyme originated, from Bacillus circulans. Around 77-78% purity of this GOS was achieved with three-step membrane separation techniques: the first one was the ultrafiltration followed by diafiltration equipped nanofiltration. In recycle membrane reactor, GOS production was found to be 33% higher than that in the batch reactor, and monosaccharide concentration was 78% lower with 23% remaining enzyme activity after 18,000 s of reaction time.