INDIA    The Indian Food Ministry has proposed that the tax rate on fruit-based aerated drinks should be reduced in the Union Budget 2018 reportedly asking the Finance Ministry to remove the cess* on these drinks. This would apply to drinks like Fanta and Appy Fizz which attract 28% GST along with 12% cess, which makes a total of 40% tax.

The Indian Beverage Association (IBA) have also made representations to the government about lowering the rate of cess in GST rates on aerated drinks highlighting concerns that what is effectively a tax rate of 40% on the category would impact the industry’s growth.

In 2016, Prime Minister Narendra Modi suggested mixing at least 2% fruit juice in aerated drinks to help 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. Coca-Cola India was reported to be exploring options for doing so.

* A cess imposed by the central government is a tax on tax, levied by the government for a specific purpose. Generally, cess is expected to be levied till the time the government gets enough money for that purpose.

Source: Financial Express India