GST: Carbonated fruit juice-based drink to get costlier

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The GST Council in its 45th meeting held in Lucknow announced that the carbonated fruit beverages of fruit drink and carbonated beverages with fruit juice will be subject to a GST of 28% with an additional 12% of compensation cess. The tax authorities have always been working upon the classification of fruit-based or fruit juice-based drinks. As per the ingredients of the products they are classified under GST tariff.

FSSAI’s regulations state that if the drink contains fruit content > 10% (5% in case of lemon) then such drink is to be considered as fruit-based beverages and to be classified under Chapter Heading 2202 99 20 taxable at a 12% rate. Another classification is a water-based drink with flavoring, which is basically a drink that contains fruit content < 5 %, classified under Chapter Heading 2202 10 attracts GST at the rate of 28% plus compensation cess of 12%.

There is still no clarity on beverages having fruit content >5% but < 10%.

With GST Council’s decision, carbonated fruit juice companies will now have to revisit their products and determine their classification under GST, according to a report in The Economic Times.

The beverage industry will therefore see an impact of this move. FSSAI’s regulation based on the content of fruit juice or fruit pulp in a beverage will not be the only factor to determine the classification of carbonated drinks. Now any, carbonated drink that contains fruit juice or fruit pulp will attract a higher rate of GST of 28% and will also attract a compensation cess of 12%.