The Indian Beverage Association (IBA) today expressed disappointment over putting of aerated beverages in 28 per cent bracket along with a cess of 12 per cent under the GST rates, saying it would hurt growth of the industry.
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.
It said that the move to impose such high rates ran contrary to the purpose of the GST regime, which is to bring about a taxation system that takes India's growth story forward, makes products more affordable for consumers.
"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.
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.
The association, however, expressed hopes that the government would reconsider the rates while also seeking a lower rate for non-sugar sweetened drinks, nutrition beverages and aerated beverages that contains fruit juice.
Pepsico and Coca Cola, however, declined to comment.
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