Centre weighs request to cut GST on aerated drinks from 28%

The Centre has received a formal request to reduce the Goods and Services Tax (GST) on carbonated beverages from the current 28 per cent, Business Today TV has learnt. In a letter to Union Finance Minister Nirmala Sitharaman, Maharashtra Deputy Chief Minister Ajit Pawar has urged the government to rationalise the tax rate in order to streamline the beverage sector, which continues to witness significant activity from informal and unorganised players.

The Indian Beverage Association (IBA) — representing industry giants such as Coca-Cola India, PepsiCo India, Dabur India, Red Bull India, and Pearl Drinks — has also made a pitch for a lower GST rate on aerated beverages. The association argues that sugar-based confectionery attracts lower GST, and questions why carbonated drinks should face both a 28 per cent GST and an additional 12 per cent compensation cess.

At present, sparkling water and carbonated soft drinks fall under the highest GST slab of 28 per cent, which is typically reserved for luxury or “sin” goods.

The GST Council has been evaluating a restructuring of the rate slabs, potentially moving to a simplified structure of two or three rates — possibly 8 per cent, 18 per cent, and 28 per cent — with only sin goods to remain under the highest category.

A Group of Ministers (GoM) on rate rationalisation had last met in October 2024 and finalised a report recommending adjustments. However, at the 55th GST Council meeting in December 2024, the proposal was deferred pending further discussion and clarity.

Sources now indicate that the GoM has not met since, and is likely to reconvene only after the 56th GST Council meeting — expected in mid-August — though a final agenda and date has not yet been set.