Traders' body CAIT makes a case for lowering GST rate on beverages from 28%

CAIT made a case for lowering the GST rate on beverages from 28 per cent, which comes to 40 per cent after inclusion of cess, arguing that it blocks the working capital of small retailers

Traders' body CAIT on Monday made a case for lowering the GST rate on beverages from 28 per cent, which comes to 40 per cent after inclusion of cess, arguing that it blocks the working capital of small retailers.

The Confederation of All India Traders (CAIT) urged the union finance minister to consider reducing GST rate on beverages and suggested that India should move to a Sugar Based Tax (SBT) system keeping the tax slabs proportional to the sugar in products, which means, higher the sugar in products, higher the tax.

"For beverages that are in the low and no sugar category, this will reduce taxes, opening up capital for the retailers to make more purchases, increase sales and double their incomes. This also benefits the common man significantly, by reducing their household costs at the same time," CAIT stated.

The traders' body said it will launch a campaign among stakeholders and citizens to forge an alliance with other verticals of the economy like farmers, transporters, SMEs, women entrepreneurs, consumers, hawkers etc. to impress upon both the Centre and state governments to lower the tax rate on beverages.

The Goods and Services Tax (GST) Council in its meeting held on September 17, 2021 had recommended that 'Carbonated Fruit Beverages of Fruit Drink' and 'Carbonated Beverages with Fruit Juice' would attract GST rate of 28 per cent and cess of 12 per cent. This is being prescribed specifically in the GST rate schedule.

"CAIT's proposal is also in alignment with the recommendations made in the Economic Survey of 2023, which has suggested that India should move from Food Security to Nutritional Security. Naturally, a key component in that would be the proposed sugar based taxation system. Beverages are not a sin tax category as neither are they a luxury good nor are they a demerit product," it stated.

CAIT Secretary General Praveen Khandewal said if GST tax rate is lowered rationally, it will increase the turnover of small shops which will yield more revenue to central and state governments.