Keeping in tune with the international practice of levying sin or demerit taxes, the proposal to fix the tax on aerated beverages at 40 per cent is expected to adversely impact the industry.

Besides aerated beverages, a panel headed by Chief Economic Advisor Arvind Subramanian on GST rates has proposed levying the sin tax on luxury cars, paan masala and tobacco and tobacco products.

Sources in the aerated beverages industry said that India’s per capita consumption for aerated drinks is among the lowest in the world and such a punitive tax rate will adversely impact the industry.

Another executive said that the proposal to impose such a high tax rate on hydration products meant for the masses, which is not a luxury product, will be damaging for the industry.

Arvind Varma, Secretary General, Indian Beverage Association, said that the industry will see how things unfold and will look into the recommendations.

The industry has in the past expressed its displeasure at being put in the same category has tobacco products. They have also been arguing that in a hot and humid country like India, aerated beverages provide instant energy and hydration to them masses, which is hygienic and at affordable prices.

The aerated beverages industry has been facing growth pangs due to unseasonal rains in the peak summer seasons, besides weak demand in rural markets, among other factors in the country.

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