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Government receives plea to cut 28% GST on aerated drinks

Government receives plea to cut 28% GST on aerated drinks

India Today5 days ago
The Centre has received a formal request to slash the Goods and Services Tax (GST) on aerated beverages, which currently attract a 28% tax along with a 12% compensation cess, taking the effective rate to 40%.Maharashtra Deputy Chief Minister Ajit Pawar has urged the Finance Ministry to rationalise the tax burden on carbonated drinks, according to government sources. Industry groups, including the Indian Beverage Association (IBA), have also made representations, arguing that the current tax regime is 'unfair' and hampers both innovation and affordability in the non-alcoholic beverage sector.advertisementThe matter is likely to be taken up at the upcoming 56th GST Council meeting, expected to be held in mid-August.
The meeting is already set to review a broader rate rationalisation framework, with officials indicating that certain slabs and cesses may be simplified or merged.Carbonated drinks fall under the so-called 'sin goods' category—alongside tobacco and pan masala—which invites the highest GST rate and a cess. Industry players have long argued that such classification is outdated, especially for low-sugar and fruit-based carbonated products.Recent court rulings have also put pressure on the current tax structure. The Gauhati High Court had ruled that certain fizzy fruit drinks, if primarily juice-based, should be taxed at 12% instead of 28%. However, this has not led to a broader reclassification.While some states may resist the change due to the revenue implications of scrapping the cess, the Centre is reportedly open to exploring alternatives as part of a wider reform to make the GST system more predictable and investment-friendly.Any revision in GST rates or cess removal would likely translate into lower prices for consumers and improved margins for beverage makers.- Ends
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