AICPDF calls for lower GST on aerated beverages, bottled water 

INDIA – The All India Consumer Products Distributors Federation (AICPDF) has urged the government to reconsider the classification of aerated beverages as “sin” goods and reduce the 18% Goods and Services Tax (GST) levied on bottled water.  

The federation submitted its plea ahead of the 56th GST Council meeting, scheduled for September 3–4 in New Delhi, where the next phase of GST 2.0 reforms will be discussed. 

Currently, aerated beverages are taxed at the highest GST slab of 28%, along with an additional 12% compensation cess, placing them in the same category as cigarettes and tobacco products.  

According to the federation, this classification is unfair given that over 70% of aerated beverage sales come from small packs priced between Rs 10 and Rs 20, which lower-income groups primarily consume. 

“Placing these in the same bracket as harmful products like cigarettes and tobacco is disproportionate. It penalises affordability for the common man while dampening consumption in a sector that supports millions of retailers,” said Dhairyashil H. Patil, national president of AICPDF.  

The federation represents more than 450,000 distributors and 13 million kirana stores across India. 

Alongside aerated beverages, the federation is also calling for a reduction in the GST on packaged drinking water from 18% to a lower slab.  

Patil argued that the high tax rate has fueled tax evasion and created opportunities for unregulated operators to sell counterfeit or substandard bottled water without paying GST. Such practices, he noted, not only deprive the government of revenue but also expose consumers to health risks. 

“Many unregulated and unlicensed operators exploit the high tax rate by selling water without proper billing, often supplying contaminated water, which undermines both consumer safety and compliant businesses,” Patil said. 

The federation’s appeal comes as the Centre prepares to roll out GST 2.0, which focuses on three pillars: rate rationalisation, structural reforms, and ease of living.  

A key proposal under consideration involves merging 99% of products in the 12% slab, mainly eatables and FMCG items, with the 5% slab, thereby lowering their tax rates. 

Similarly, about 90% of goods currently taxed at 28% are expected to shift to the 18% slab, while only luxury and “sin” goods would remain in a special 40% bracket. 

The group of ministers on rate rationalisation, led by Bihar Deputy Chief Minister Samrat Choudhary, recently gave in-principle approval to the Union government’s proposal to reduce the number of GST slabs from four to two. However, concerns remain over revenue implications and state compensation. 

A final decision on these reforms will rest with the GST Council, chaired by the Union finance minister, with state finance ministers as members.

Decisions are typically made unanimously, and the rationalisation could be announced ahead of Diwali as a relief measure for consumers and businesses alike. 

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