The IBA, which has members like PepsiCo, Coca Cola and Red Bull, said this increase will have a negative ripple effect and hurt the entire ecosystem of farmers, retailers, distributors and bottlers in India.
"The IBA is extremely disappointed with sweetened aerated water and flavoured water being placed in the highest tax slab rate of 28 per cent combined with an additional cess of 12 per cent," the association said in a statement.
"This increase in tax will further limit the growth of the beverage industry," IBA said.
It further said the effective tax rate of 40 per cent on aerated drinks is also against the stated policy of maintaining parity with the existing weighted average tax which is significantly below 40 per cent.
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Moreover, the IBA said imposition of cess on non-aerated flavoured water and nutrition drinks is not in line with the stated intentions of levying cess only on aerated drinks.
Pepsico and Coca Cola, however, declined to comment.