As the countdown for the Budget 2018 has begun, the Food Ministry has pitched for lowering the tax rate on fruit-based aerated drinks in the Union Budget.
As the countdown for the Budget 2018 has begun, the Food Ministry has pitched for lowering the tax rate on fruit-based aerated drinks in the Union Budget. The Food Ministry has asked the Finance Ministry to remove the cess on these drinks, ET Now reported quoting sources. Fruit-based aerated drinks like Fanta, Appy Fizz et al attract 28% GST along with 12% cess, which makes a total of 40% tax.
Earlier, the Indian Beverage Association (IBA) had asked the government to reconsider a lower rate of cess in GST rates on aerated drinks stating that the categories with an effective tax rate of 40% would impact the industry’s growth.
In 2016, Prime Minister Narendra Modi suggested mixing at least 2% fruit juice in aerated drinks to help distressed farmers find a new market for their produce. “Why can’t 2% natural juice be mixed in aerated drinks? This will provide farmers with a market for their produce,” he explained.
The possibility of blending cold carbonated drinks, which are widely considered not healthy, with natural fruit juice is also being looked into. According to a report by the Indian Council for Research on International Economic Relations, consumption of non-alcoholic beverages is expected to increase by 16.5-19% over the next three years in the country.
After Prime Minister’s call for mixing fruit juice in aerated drinks, Beverages major Coca-Cola India was reported to be exploring options for doing so. PTI reported that the company, which procures about 2 lakh metric tonnes of fruits, planned to increase it further as part of its ‘fruit circular economy’ initiative.