GST Council raises tax on sweetened, carbonated drinks to 40%

The GST Council, at its 56th meeting, hiked the tax on sweetened and flavoured beverages — including carbonated and caffeinated drinks — from 28% to 40%, a move that could weigh on the  products from companies such as Coca-Cola, Pepsi, Nestlé, Dabur and Tata Consumer,

The steep increase, announced late on September 3, will take effect from September 22.  Items such as carbonated fruit drinks, fruit-juice-based fizzy beverages, non-alcoholic flavoured drinks, and all aerated waters containing added sugar or sweeteners will now attract the steep 40% GST.

This comes even as the Indian Beverage Association (IBA) placed a plea before the government to not put the carbonated drinks in the sin goods category.  The industry body had proposed a sugar-based taxation model, aligned with global practice, to differentiate low/no-sugar and fruit variants.

IBA represents the non-alcoholic beverage industry in India, and leading players, including Coca-Cola, Pepsico, Reliance, Bisleri, Dabur, and Red Bull are its members. According to IBA, the non-alcoholic beverage industry was valued at USD 49.6 billion in 2023 and is poised to grow to USD 64 billion by 2028, registering a CAGR that outpaces global averages.