The Indian Beverage Association (IBA) is calling on the GST Council to reclassify aerated drinks. They want them moved from the 'sin/demerit' category, which currently incurs a 40% tax (28% GST + 12% cess), to the 'food/merit' category with an 18% GST slab. The IBA argues this classification is unfair, as soft drinks don't pose the same public health risks as items like tobacco. They propose a sugar-based tax system instead and also want GST on fruit juices reduced to 5%.
The Indian Beverage Association (IBA) has appealed to the GST Council to reclassify aerated beverages from the current 'sin/demerit' category to the "food/merit" category, placing them under the 18% GST slab instead of the existing 40% tax burden. At present, carbonated drinks attract 28% GST plus 1
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FAQ :
The IBA is urging the GST Council to reclassify aerated beverages from the 'sin/demerit' category to the 'food/merit' category.
Currently, aerated drinks attract 28% GST plus a 12% compensation cess, totalling 40%.
The IBA proposes placing aerated drinks under the 18% GST slab.
The IBA suggests adopting a sugar-based taxation approach, similar to global models, to differentiate between high-sugar and healthier drink options.
Lowering GST could improve affordability, spur demand, unlock economic growth for distributors and retailers, encourage investment, and support job creation.
The IBA has reiterated its demand to rationalise GST on fruit juices from 12% to 5% to boost affordability and demand.