GST on Carbonated Cold Drinks 

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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

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.

FSSAI Registration For Energy Drink

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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