GST officials have started thrusting local beverage companies adding fruit pulp and getting exclusion from the 40% and putting them back into the bracket they are actually in. Carbonated drinks are highly falling in 40% levy bracket such as Sprite, and more including cess on sin goods, similar drinks based on fruit pulp or juice fall in the 12% tax bracket.

Then back in 2014, Under his Atmanirbhar Bharat Idea PM Modi requested all stalwarts in the sector to atleast add fruit pulp in drink to strengthen the local farmer incentives.The announcement resulted in both multinational and local companies launching fruit-based fizzy drinks that attracted lower GST.

Regional beverage associations in Punjab, Haryana, NCR, UP, and Rajasthan have finalized plans to shift to the 40% levy and there have been numerous raids on these companies and the penalty for evading GST is huge. They cannot risk it anymore as the pandemic has crippled business.

Adding fruit juice to fizzy drinks is not easy as it requires high capital expenditure,” said Akhil Gupta, the proprietor of a medium-sized North India-based beverage company, Fresca. Moving to a higher rate of GST may result in price hikes,” he added.

The increase in the maximum retail price could augur well for large players such as Coke and PepsiCo in the Rs. 14,000-crore domestic soft drinks industry.

GST collection is an integrated part of country’s economy and due to inclusion and categorisation of all the products in several GST categories the beverages somehow mismanaged the brackets that government allocated owing to the ingredients it contains. Similarly after the introduction of GST union government looked into the matters in this context also and this initiative came in the similar pursuit.

GST is a value-added tax levied at all points in the supply chain, with credit allowed for any tax paid on input acquired for use in making the supply. It would apply to both goods and services in a comprehensive manner, with exemptions restricted to a minimum.

 

 

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