Notification No. 01/2021-Compensation Cess (Rate) issued by CBIC on September 30th, 2021 mandates a 12% Compensation Cess on Carbonated Beverages containing Fruit Drink or Fruit Juice under the GST regime.
So, if you wish to start a Carbonated Cold Drink business or any other beverages business, you must get GST Registration and know about the GST on Carbonated Cold Drinks.
High GST Rate on Carbonated Cold Drinks
The Goods and Services Tax (GST) is a single tax in India that has replaced many other taxes.
Carbonated cold drinks are taxed at a total rate of 40% as sin goods are taxed. This includes a 28% GST and a 12% compensation cess.
Initially, the GST rate for carbonated cold drinks was 12%.
However, in September 2021, the GST Council raised it to 28% along with a 12% compensation cess.
Opinions about the increased GST rate on carbonated cold drinks are divided.
Some people think it’s fair because these drinks are considered a luxury. Others believe it’s unfair because it will affect lower-income families more.
GST Rates on Other Beverages and Drinks
| Rates (%) | Products Description | HSN Codes | Export and Import HSN Codes |
| NIL | Water [other than aerated, mineral, purified, distilled, medicinal, ionic, battery, de-mineralized and water sold in sealed container] | 2201 | 22011010, 22011020, 22019090 |
| NIL | Non-alcoholic Toddy, Neera including date and palm neera | 2201 | 22011010, 22011020, 22019090 |
| 18% | Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter or flavoured | 2201 | 22011010, 22011020, 22019090 |
| 18% | Ethyl alcohol and other spirits, denatured, of any strength [other than ethyl alcohol supplied to Oil Marketing Companies for blending with motor spirit (petrol) inserted on 27/07/2018] | 2207 | 22071011, 22071019, 22071090, 22072000 |
| 5% | Ethyl alcohol supplied to Oil Marketing Companies for blending with motor spirit (petrol) | 2207 | |
| 18% | Vinegar and substitutes for vinegar obtained from acetic acid | 2209 | 22090010, 22090020, 22090090 |
| NIL | Tender coconut water other than put up in unit container and bearing a registered brand name | 22029090 | – |
| 5% | Tender coconut water put up in unit container and bearing a registered brand name, or bearing a brand name. | 22029090 | – |
| 18% | Other non-alcoholic beverages | 22029090 | – |
| 12% | Beverages containing milk | 22029030 | – |
| 12% | Fruit pulp or fruit juice based drinks | 22029020 | – |
| 12% | Soya milk drinks | 22029010 | – |
| 18% | Other non-alcoholic beverages [other than tender coconut water] | 22029100 | – |
| 18% | Other non-alcoholic beverages [other than tender coconut water] | 22029990 | – |
| 28% | Others | 22021090 | – |
| 28% | Lemonade | 22021020 | – |
| 28% | Aerated Waters | 22021010 | – |
| 5% | Ice and snow | 22019010 | – |
| 28% | All goods [including aerated waters], containing added sugar or other sweetening matter or flavoured | 220210 | – |
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Non-Alcoholic Beverage Industry Calls for Lower Taxes on Fruity Drinks
The Indian Beverage Association (IBA), representing companies like Coca-Cola and Pepsico, has asked the government to exclude fruit-based carbonated drinks from the “sin” goods category, which includes unhealthy goods.
Currently, all carbonated beverages, regardless of their content, are considered sin goods and taxed at a high rate.
The IBA is requesting a lower GST rate of 12 or 18 percent for these drinks.
Additionally, the IBA is in talks with the Food Safety and Standards Authority of India (FSSAI) to establish separate standards for sugar-free and sugary beverages.
- The classification of fruit-based fizzy drinks as sin goods has created a negative perception, according to the IBA.
- They argue that this perception harms the non-alcoholic beverage industry and impedes its growth.
The IBA has received support from the food processing ministry and has approached several states with similar demands.
The IBA claims that higher sin taxes do not influence consumer behavior and that taxing carbonated fruit drinks at a higher rate is not a solution to the obesity issue, as they contribute only a small portion of calories to the average diet.
Moreover, If you want any other guidance relating to GST on Carbonated Cold Drinks, please feel free to talk to our business advisors at 8881-069-069.
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