In yet another push for GST rationalisation from the industry, the Indian Beverage Association (IBA) has approached North Block, urging a re-examination of high tax rates.
The ₹60,000 crore industry, representing Indian companies in the non-alcoholic beverage sector such as PepsiCo, Bisleri, Coca-Cola, Campa (Reliance Industries Ltd), Dabur, Tata Group, and others, has separately written to the government, the Finance Ministry, the GST Council, and the GST Council-nominated Group of Ministers (GoM) on rate rationalisation.
In an exclusive interview with CNBC-TV18, CK Jaipuria, Chairman of the Indian Beverage Association, stated that an urgent rationalisation of the current GST rates is necessary, describing high taxes as “retrograde.”
The industry, valued at approximately ₹60,000 crore and growing at around 14% year-on-year, believes high taxes burden it and has suggested that the government reduce GST across various sector sub-segments.
Indian Beverage Association (IBA) Chairman CK Jaipuria noted, “We have suggested reducing GST on bottled water from 18% and 12% to 5%, to bring it at par with food since it is an essential commodity.”
“India has limited access to good quality potable water, and bottled water is taxed at 18% GST. Water is consumed by all; we have requested the government to reduce rates to 5%. Recently, the government purchased bottled water from the industry for distribution during natural disasters, such as floods in Andhra Pradesh, which reflects its necessity. A reduction will help us pass on the benefits,” Jaipuria added.
The industry has also proposed that the GST on beverages, including bottled water, carbonated drinks, and fruit juices, which are currently taxed at different high rates, should be reduced across all categories.
“High taxes are retrograde. Currently, fruit juices are taxed at 12%. The Prime Minister had asked the industry to increase the procurement and processing of fruits to help farmers. The PM promised us that if we increased the content of fruit pulp in drinks, taxes would be reduced. The industry is still waiting on this, despite having increased the fruit content,” said Jaipuria.
“We have requested the government to reduce GST on fruit juice from 12% to 5%, at par with food,” Jaipuria continued.
Another key sub-segment of the non-alcoholic beverage sector is carbonated drinks, which is a major contributor to the industry. The industry has also requested a reduction in GST rates for this category.
“Carbonated drinks are a huge segment under the non-alcoholic beverage sector, but they are classified under sin goods at 28% plus a 12% cess. The cess was supposed to be subsumed within five years, yet it still continues. We don't know how taxes will evolve after the cess ends. We have requested the government to remove carbonated drinks from the sin goods category, as they are consumed by all income groups. Carbonated drinks cannot be treated at par with alcohol and tobacco,” Jaipuria stated.
“We have suggested that the government reduce GST on carbonated drinks from 28% plus a 12% cess to 18%,” he added.
The six-member Group of Ministers (GoM), led by Bihar Deputy Chief Minister Samrat Chaudhary, is scheduled to meet tomorrow in Goa to discuss several issues, including the representation submitted by the Indian Beverage Association. The GoM last met on August 22 in New Delhi, where Chaudhary stated that the panel had received recommendations from the beverage association and would discuss them in the next GoM meeting.
It remains to be seen whether the proposal will be taken up for discussion at tomorrow’s GoM meeting in Goa.
Source: CNBC TV 18
