Reject Proposal To Hike GST On Aerated Beverages To 35%: FMCG Industry Body Urges Government

All India Consumer Products Distributors Federation appealed to the Centre against increasing the goods and services tax rate to 35% on aerated beverages.

The umbrella body that represents fast-moving consumer goods distributors said that the move could "negatively impact" distributors, retailers and consumers, especially in rural and semi-urban areas.

"Aerated beverages...serve as affordable refreshment options for lower-income groups and rural populations. Any increase in tax will not only impact their consumption but also jeopardise the earnings of distributors and retailers across the country," said AICPDF, which claims to represent 4.5 lakh distributors and 1.3 crore 'Kirana' stores.

The Group of Ministers on GST rate rationalisation, in its meeting earlier this month, recommended a tax rate hike to 35% from the current 28% on sin goods like aerated beverages, cigarettes, tobacco and related products.

Aerated beverages such as carbonated soft drinks and sparkling water are presently taxed at the highest GST slab of 28% with an additional 12% compensation cess.

AICPDF has requested the Centre to re-evaluate the potential move and to focus on policies that promote affordability, growth and sustainability in the FMCG sector.

According to the federation, distributors are already facing significant margin pressures due to slowing consumer demand and rising operating costs.

"An increase in GST would likely lead manufacturers to cut costs, further reducing the margins of distributors and retailers, thereby impacting their incomes and livelihood," it said.

Moreover, a GST hike would result in a significant increase in prices, making these products unaffordable for a large section of the population and leading to a steep decline in sales.

It has urged the government to "refrain from implementing the proposed GST rate of 35%" and "rationalise and lower" it.

(With inputs from PTI)