The Indian Beverage Association (IBA) has raised concerns about the potential Goods and Services Tax (GST) rate hike on aerated drinks, currently taxed at 40% (28% GST + 12% cess). The IBA, which represents industry giants like Coca-Cola, PepsiCo, Dabur, Reliance Consumer Products, and Red Bull, is urging the government to remove the 12% cess and bring the total tax rate down to 28%.
Speaking at the National Beverage Conclave, IBA Chairperson C.K. Jaipuria highlighted the burden of the current tax regime, particularly on zero-sugar products. “We have made representations at all levels to the government, including the GST Council, but taxation remains a bottleneck at all levels,” he said.
Recent media reports suggested that a Group of Ministers (GoM) has recommended increasing GST rates on aerated beverages, cigarettes, and tobacco to 35%. While the Central Board of Indirect Taxes and Customs (CBIC) has dismissed these reports as speculative, the possibility of a hike has alarmed the beverage industry.
Jaipuria emphasized that the industry “cannot afford even half a percent increase” and reiterated the need for the cess to be waived. “The biggest roadblock for the industry is the taxation structure. We are hoping that by March 2026, when the 12% cess is scheduled to be removed, the tax rate will return to 28%,” he said.
The IBA believes the high tax rate not only impacts manufacturers but also discourages innovation and growth in the beverage sector. The association has consistently advocated for a more balanced tax structure to support the industry’s sustainability and competitiveness.
With the GST Council yet to announce any official changes, the beverage industry remains hopeful for a reprieve that could ease the tax burden and stimulate growth.