With 91% Cola Lovers, Will Soft Drinks be Out of ‘Luxury Item’ List? FinMin May Consider Tax Relief

Citing examples of foreign countries where the local beverage industry were given tax relief after the impact of the pandemic hit, the IBA said their primary assessment have shown the industry will take a hit by almost 34 percent due to the lockdown restrictions and subsequent economic hit.

The note said by June 15, 2020, reduced VAT rates for soft drinks were applied in Austria, Greece and Belgium, whereas Sweden and Denmark are in talks for the same.

The IBA pleaded that aerated drinks have been placed in the highest GST slab of 28 percent and the high GST levy of 40 percent on aerated beverages is against the stated policy of the government to maintain parity between pre-GST and GST regimes. The note requested the Centre to reconsider its position and not single out aerated drinks category to levy heavy taxes.

It also said that soft drinks are consumed across all socio-economic classes and thus should not be considered as a luxury product. Giving example of an NCAER study, the note said that it showed 91 percent sales of soft drinks come from lower, middle and upper middle classes and are one of the readily available sources of safe hydration and refreshment. They also added that average price range of such products are between Rs 10 to Rs 30, thus making the products easily accessible to all sections of society.