Indian Beverage Industry seeks GST Rate cuts on Bottled Water, Juices and Sodas to Boost Sector Growth

In another major push for GST rationalisation from the industry, the Indian Beverage Association (IBA) has approached North Block, demanding a reconsideration of high tax rates.

The Rs.60,000 crore industry, which represents Indian non-alcoholic beverage companies such as PepsiCo, Bisleri, Coca-Cola, Campa (Reliance Industries Ltd), Dabur, Tata Group, and others, has separately written to the government, the Finance Ministry, the GST Council, and the GST Council-nominated Group of Ministers (GoM) about rate rationalisation.

In an exclusive interview with a media channel, CK Jaipuria, Chairman of the Indian Beverage Association, indicated that an immediate rationalisation of present GST rates is required, describing excessive taxes as “retrograde.”

The industry, which is valued at roughly Rs.60,000 crore and increasing at a rate of about 14% per year, believes that excessive taxes burden it and has proposed that the government decrease GST across several sector sub-segments.

CK Jaipuria, Chairman of the Indian Beverage Association (IBA) said, “We have proposed reducing GST on bottled water from 18% and 12% to 5%, to bring it on par with food since it is an essential commodity.”

“India has limited access to high-quality drinking water, and bottled water is taxed at 18% GST. Everyone consumes water; we have urged that the government lower rates to 5%. Recently, the government purchased bottled water from the business for distribution after natural disasters, such as floods in Andhra Pradesh, showing its importance. A reduction will allow us to pass on the benefits,” Jaipuria said.

The industry has also recommended that the GST on beverages, such as bottled water, carbonated drinks, and fruit juices, which are now taxed at various high rates, be decreased across the board.

“High taxes are regressive. Currently, fruit juices are taxed at 12%. The Prime Minister has ordered the sector to enhance fruit procurement and processing to support farmers. The PM pledged that if we raised the amount of fruit pulp in drinks, taxes would be cut. Despite increasing the fruit content, the business is still waiting for this,” Jaipuria explained.

“We have asked the government to reduce GST on fruit juice from 12% to 5%, at par with food,” Jaipuria said.

Carbonated drinks, another important sub-segment of the non-alcoholic beverage sector, contribute significantly to the industry. The industry has also asked for a reduction in GST rates for this category.

“Carbonated drinks are a significant portion of the non-alcoholic beverage sector, yet they are categorized as sin goods at 28% plus a 12% cess. The cess was expected to be eliminated within five years, yet it still exists. We don’t know how taxes will change after the cess expires. We have asked the government to remove fizzy drinks from the sin goods list because they are consumed by people of all income levels. Carbonated beverages cannot be regarded equally with alcohol and tobacco,” Jaipuria stated.

“We requested that the government cut GST on carbonated drinks from 28% plus a 12% cess to 18%,” a spokesperson said.

The six-member Group of Ministers (GoM), chaired by Bihar Deputy Chief Minister Samrat Chaudhary, will meet tomorrow in Goa to discuss a number of issues, including the Indian Beverage Association’s representation. The GoM last met in New Delhi on August 22, and Chaudhary noted that the panel had received proposals from the beverage association and will discuss them at the next GoM meeting.

It’s unclear whether the suggestion will be discussed during today’s GoM meeting in Goa.