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Beverage Sector Calls for GST Reduction

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Synopsis:

India's ₹60,000 crore beverage industry seeks GST cuts on bottled water, juices, and sodas before a key GoM meeting, aiming for fair taxation.

Beverage industry news today

The Indian Beverage Association (IBA), representing major non-alcoholic beverage players like PepsiCo, Coca-Cola, and Tata Group, has formally requested the government for a reevaluation of the GST rates applied to beverages including bottled water, fruit juices, and carbonated drinks. This plea comes in anticipation of the upcoming meeting of the GST Council-nominated Group of Ministers (GoM) in Goa.

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Push for tax alignment with essential commodities

The industry argues that the current GST rates are disproportionately high, especially considering the essential nature of products like bottled water. The IBA has proposed reducing the GST on bottled water from the current rates of 18% and 12% to 5%, aligning it with other basic necessities. This request highlights the industry's stance that water, a vital resource, should not endure luxury-level taxation, especially given India's challenges with potable water access.

Advocacy for broader GST reductions

Furthering its case, the IBA has also advocated for a reduction in GST across all beverage categories. For fruit juices, the proposal suggests lowering the GST from 12% to 5% to support the agricultural sector by incentivising the procurement and processing of more fruit, which would benefit farmers as previously discussed with government officials.

Carbonated drinks, often taxed at the highest bracket due to their classification as 'sin goods'—28% GST plus a 12% cess—are also in the spotlight. The association has recommended a revision to a flat 18% GST rate, arguing that the consumption across various income groups does not justify the sin goods classification, which traditionally includes products like alcohol and tobacco.

Implications and expectations

This appeal aligns with a broader industry expectation for a more rational and growth-conducive tax structure that would not only support manufacturers but also provide relief to consumers by potentially lowering retail prices. The IBA believes that such tax adjustments could significantly enhance the affordability and accessibility of beverages across the market.

The GoM's response to these proposals is keenly awaited, as their decisions could have significant implications for the beverage industry's pricing structure and competitive dynamics. The meeting in Goa is set to address these recommendations, potentially setting the stage for noteworthy policy shifts in one of India’s robust economic sectors.

As the GoM convenes to discuss these critical issues, the beverage industry looks forward with anticipation, hoping for positive changes that support its growth and alignment with global taxation standards.

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