The Indian Beverage Association (IBA) has written a note to Finance Minister Nirmala Sitharaman requesting for tax relief for bottled soft and aerated drinks, an exclusive report by MoneyControl said.
The note has cited severe losses faced by the sector that has been hit badly by the coronavirus pandemic and subsequent economic meltdown.
In its note, the IBA has requested that colas and other soft drinks should not be levied sin tax as the Rs 70,000-crore industry has already suffered a setback of Rs 1,200 crore loss. The note added that the expiry of ingredients having a shelf life and with beverage sales ebbing hit due to the lockdown have added to the losses.
The GST Council, that decides on the tax rates for the products, is scheduled to organise its 41st and 42nd meetings next week and as such, the demand by the IBA comes at a crucial time.
The IBA has members such as Dabur India, Red Bull India, Coca-Cola India and Pepsico India Holdings. The note by the beverage body has also asked the government to remove the compensation cess, move juice-based drinks from the current GST slab of 12 percent to 5 percent and put packaged drinking water from the current GST category of 18 percent to 12 percent, MoneyControl quoted the note as saying.
In addition to its demands, the IBA has also invoked the Supreme Court's judgement of October 22, 2013 on aerated drinks where it had said that as per findings by experts, ingredients in the beverage do not seem to be causing any adverse health problems.
Citing examples of foreign countries where the local beverage industry were given tax relief after the impact of the pandemic hit, the IBA said their primary assessment have shown the industry will take a hit by almost 34 percent due to the lockdown restrictions and subsequent economic hit.
The note said by June 15, 2020, reduced VAT rates for soft drinks were applied in Austria, Greece and Belgium, whereas Sweden and Denmark are in talks for the same.
The IBA pleaded that aerated drinks have been placed in the highest GST slab of 28 percent and the high GST levy of 40 percent on aerated beverages is against the stated policy of the government to maintain parity between pre-GST and GST regimes. The note requested the Centre to reconsider its position and not single out aerated drinks category to levy heavy taxes.
It also said that soft drinks are consumed across all socio-economic classes and thus should not be considered as a luxury product. Giving example of an NCAER study, the note said that it showed 91 percent sales of soft drinks come from lower, middle and upper middle classes and are one of the readily available sources of safe hydration and refreshment. They also added that average price range of such products are between Rs 10 to Rs 30, thus making the products easily accessible to all sections of society.
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