Industry bodies, including Retailers Association of India (RAI) and PHD Chamber of Commerce and Industry (PHDCCI), have urged the GST Council to rationalise GST on the non-alcoholic beverages segment. The industry wants lower GST on agri-based beverages and exemption for packaged drinking water.

Stating that non-alcoholic beverage industry in India faces “one of the highest tax rates globally”, the industry bodies added that most of the products in this category are taxed under high GST tax slabs of 12 per cent to 28 per cent.

The industry bodies, in their representations sent to various authorities, have said that packaged drinking water, which is an essential commodity, is subjected to 18 per cent GST (for less than 20 litres packs, 12 per cent for more than 20 litres). The bodies have pitched for packaged drinking water to be exempted and classified under nil GST slab similar to other essential commodities.

“Water is an essential commodity for the public and should be made available at the best affordable price. The high GST rate of 18 per cent renders water to be treated as a luxury item, and GST rate comparable with other non-alcoholic beverages,” the Retailers Association of India stated in its representation.

These industry bodies have also urged the council to incentivise the agri-based beverages segment (fruit juices) by lowering GST from the current rate of 12 per cent to 5 per cent to boost demand for the category. “This will align with 5 per cent GST rate on other agri-based processed food categories like vegetable fats and oils; edible seeds; pre-packaged grains; cereals, pulses and dairy products; frozen vegetables; and processed spices,” PHDCCI stated in its representation.

Meawhile, these industry bodies have also made a case for lowering GST on beverages (non-agri) with low sugar content. Industry players have suggested that such diet carbonated and non-carbonated beverages with zero sugar should be taxed at 12 per cent GST rate from the current 28 per cent. Non-agri based beverages with less than 6 per cent sugar should be taxed at 18 per cent, they added.

“Rationalization of GST rates for non-alcoholic beverages shall attract large investments to enhance domestic capacity in food processing industry and will entail many benefits across the value chain with affordable pricing to the end-consumer,” the industry bodies stated.

Source: The Hindu Business Line 
https://www.thehindubusinessline.com/economy/non-alcoholic-beverages-industry-bodies-pitch-for-rationalisation-of-gst/article67618620.ece