IBA to Govt: Don’t tax low/no-sugar drinks like Sin Goods
This development comes amid double-digit growth in no-sugar and low-sugar beverages. Varun Beverages, PepsiCo India's bottling partner, reported that 55 percent of its total sales between January and June 2025 came from low- or no-sugar drinks.
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The Indian Beverage Association (IBA), which represents soft drink companies such as Coca-Cola, PepsiCo, and Reliance Consumer Products, has written to the Finance Ministry requesting a 'sugar-based taxation' approach, in line with globally accepted models, according to an Economic Times report. A GST Council meeting is scheduled for early September to decide on tax slabs for a wide range of consumer goods.
The existing taxation system overlooks low- or no-sugar variants and fruit-based beverages that offer healthier alternatives, the IBA stated. Currently, all aerated drinks—including no-sugar, low-sugar, and fruit-based variants—are taxed at 28 percent GST, along with an additional 12 percent compensation cess, bringing the total tax to 40 percent. The category is grouped under 'sin goods' alongside tobacco and pan masala.
This development comes amid double-digit growth in no-sugar and low-sugar beverages. Varun Beverages, PepsiCo India's bottling partner, reported that 55 percent of its total sales between January and June 2025 came from low- or no-sugar drinks.
In 2024, sales of low- or no-sugar drinks doubled, and according to the report, accounted for over 10 percent of the overall beverages category. This shift indicates that urban Indians are increasingly opting for healthier alternatives.
The IBA’s letter also argued that aerated drinks have been misclassified as sin or demerit goods. PepsiCo offers no-sugar products such as 7Up No Sugar, Pepsi Black, and Gatorade. Coca-Cola's portfolio includes Thums Up X Force, Sprite Zero, Diet Coke, and Coke Zero, along with other products like Honest Tea, Charged, and BodyArmor Lyte.
