IBA urges Centre to reduce GST on carbonated fruit drinks

The Indian Beverage Association (IBA) has urged the Centre and State governments to reduce tax on carbonated fruit drinks and to remove it from the “sin” goods category. The beverage industry body has requested this category of beverages be put in the 12 per cent or 18 per cent GST slab.

Such products currently attracts GST of 40 per cent which includes 28 per cent GST plus 12 per cent Compensation Cess.

The industry body in its representation pointed out that while GST on fruit juices is at 12 per cent and on other goods it is at 12-18 per cent but the carbonated fruit drinks attract higher tax of 40 per cent.

“The Indian Beverage Association (IBA) feels that such a higher rate of tax on carbonated fruits beverages would be an impediment to the growth of non-alcoholic beverages industry and hinder investment in the area. Reduction in the rate of tax on ‘carbonated beverages with fruit juice’ to 12 per cent GST or to a maximum level of 18 per cent GST, would bring about several beneficial results,” it said in its representation.

The industry body pointed out that reduction in the GST on carbonated fruit drinks will provide the “much-needed impetus to beverage companies” to firm up their investment decision to commit to creating new capacities for such products.

Zero sugar aerated drinks

IBA has also urged the government to reduce GST on zero sugar or zero calorie aerated drinks. Stating that zero sugar aerated drinks are “ better and healthier” versions of standards aerated drinks, the industry body has requested for reduction of GST on such products to 18 per cent from the current rate of 40 per cent ( 28 per cent GST plus 12 pe cent compensation cess).

“The IBA is of the view that the two products — regular carbonated drinks and Zero Sugar drinks — being dissimilar products, the tax rates should also be dissimilar,” it added.

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