On Monday, the trade body CAIT made a case for reducing the GST rate on beverages from 28% which will be 40% including the cess. They questioned that it is too high and restricts the operating capital of small retailers.
The Confederation of All India Traders (CAIT) requested the union finance minister to take into consideration reducing the GST rate on fruit juice beverages and suggested that India should switch to a system of Sugar-Based Tax (SBT), keeping the tax slabs proportional to the amount of sugar in products, meaning the higher the amount of sugar in products, the higher the tax.
According to CAIT, this will result in lower taxes for low- and no-sugar beverages, opening up capital for shops to spend more, boost sales, and double the revenue. The common man also gains a lot from this because it lowers household expenses at the same time.
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The traders’ body announced that it would drive a campaign among interested parties and citizens to form an alliance with other major economic sectors like farmers, transporters, SMEs, women entrepreneurs, consumers, hawkers, etc. to entice the Central and State governments to reduce the tax rate on beverages.
The GST Council suggested that “carbonated fruit beverages of fruit drink” and “carbonated beverages with fruit juice” be liable to a GST rate of 28% and a cess of 12% in its meeting, held on September 17, 2021, which is clearly prescribed in the GST rate schedule.
The strategy put up by CAIT is also in line with the Economic Survey of 2023’s recommendation that India should shift its focus from food security to nutritional security. Naturally, the proposed sugar-based taxing scheme would be the main component of it. Since they are neither a luxury good, beverages do not fall under the high tax category.
According to CAIT Secretary General Praveen Khandelwal, if the GST tax rate is rationally reduced, it will boost small businesses’ sales, which will result in more revenue collection for the Central and State governments.