India cuts GST on coffee, food products to 5% in major tax reform 

INDIA – The Indian government has announced sweeping reforms to its Goods and Services Tax (GST), reducing rates on coffee and other food products to 5%.  

The decision was made during the 56th GST Council meeting chaired by Finance Minister Nirmala Sitharaman and represents one of the most significant changes to India’s tax regime since GST was first implemented in 2017. 

The new structure streamlines GST into two main slabs—5% for essential and merit goods, and 18% as the standard rate.  

A new 40% category will also be introduced for non-merit goods, such as tobacco and carbonated beverages, which have been classified as “super luxury” and “sin” items. 

The reduced rates, including the cut on coffee from 12%–18% to 5%, will take effect on September 22, 2025, coinciding with the Navratri festival. 

Welcoming the move, Kelachandra Coffee Managing Director Rana George described the reform as a boost for India’s coffee industry.  

“We welcome the government’s decision to reduce GST on coffee from 18 per cent to five per cent, a progressive step that will significantly uplift the Indian coffee industry. By making coffee more affordable and accessible, this move will accelerate domestic consumption and open new avenues for market growth,” he said. 

Prime Minister Narendra Modi said the reforms are part of efforts to lower India’s GST in response to tariffs of up to 50% placed on Indian goods by the United States.  

“The wide-ranging reforms will improve the lives of our citizens and ensure ease of doing business for all, especially small traders and businesses,” Modi noted. 

Coffee has been placed in the merit category, meaning roasted beans, instant coffee, and processed coffee items will now attract only 5% GST. Industry observers expect the reform to create benefits across the value chain. 

Growers and processors are projected to gain from stronger domestic demand, while retailers and cafés could see increased sales volumes due to lower consumer prices. For consumers, the reduction provides relief at a time when food and beverage costs have been rising. 

India, already one of the world’s leading producers of Arabica and Robusta, is expected to see a surge in coffee consumption.  

Analysts suggest the tax cut could help reduce the traditional dominance of tea, while further energizing India’s specialty coffee culture. 

Sign up HERE to receive our email newsletters with the latest news and insights from Africa and around the world, and follow us on our WhatsApp channel for updates.