GST on Cold Drinks: Tax Rates, HSN Code and Impacts

GST on Cold Drinks: Tax Rates, HSN Code and Impacts

India’s long summers make cold drinks an everyday essential, from fruit-based beverages to carbonated sodas. But while they may all look alike on store shelves, their GST classification varies widely.

Following the 56th GST Council meeting held on 22nd September 2025, major rate restructurings were announced along with the removal of the 12% compensation cess on carbonated drinks. These updates simplify the indirect tax structure and align rates with health and industry goals.

Key Takeaways

• GST on carbonated fruit drinks or carbonated beverages with fruit juice increased from 28% to 40% (12% cess removed but absorbed into a single higher rate).
• GST rates on packaged drinking water, soy milk drinks, and fruit pulp or juice-based drinks (non-carbonated) have been reduced from 12% to 5%.
• Plant-based milk drinks (ready-to-drink) now attract 5% GST, reduced from 18%.
• All aerated beverages containing sugar or flavouring now fall under a flat 40% GST rate.

GST Rates on Cold Drinks

Earlier, non-alcoholic carbonated beverages were taxed at 28% GST plus 12% compensation cess, categorising them as demerit goods due to their high sugar content. With the cess now withdrawn, a uniform 40% GST rate replaces the earlier dual taxation, making compliance simpler while maintaining the government’s discouraging stance on excessive consumption of such drinks.

The revised GST structure benefits fruit-based and plant-based beverages through lower rates, encouraging healthier choices, while keeping sugary carbonated drinks at the top-taxed category. Alcoholic beverages remain outside GST’s ambit, continuing under state VAT.

Product Classification and HSN Codes

The GST Council has reorganised cold beverages into specific categories to remove classification ambiguity. Businesses must ensure the correct HSN codes are used on invoices for accurate compliance.

Impact of GST on Different Types of Cold Drinks

Walk into an urban café or a bustling supermarket, and it’s clear. Indians love their cold beverages. But the game is changing. With carbonated and flavoured drinks now carrying a steep 40% GST tag, these staples are officially “sin goods”. Expect the higher prices to make consumers pause, with many thinking twice before reaching for that extra bottle of cola.

Meanwhile, the government has dialed up rewards for healthier sips. Fruit juices, soy-based, and plant-based drinks now carry just 5% GST, a clear sign that policy is putting its money where the health advice is. And for those grabbing a quick hydration fix, the lighter tax on packaged water and tender coconut water is set to fuel the booming wellness trend.

For businesses? It’s a longer, clearer runway. The updated GST structure cuts confusion, ends the usual squabbles over classification, and makes it easier to plan ahead. The whole sector, from corner stores to beverage giants, finally get a smoother, more predictable playing field.