The maker of Coca-Cola and Sprite fizzy drinks and Minute Maid juices is pushing for a post-GST taxation policy that would treat all companies fairly based on the content of the product. India is the beverage maker’s sixth biggest market globally.
The Indian arm of the US company has sought that the average tax rate of 34% to be retained on aerated drinks after the GST is introduced, likely, on July 1. The GST Council recently said it will levy a cess of 15% on this particular category on top of a peak rate of 28%.
This makes the total tax rate on carbonated drinks at 43%. Coca-Cola has proposed a 6% cess over peak rate. “We hope and expect that all products that contain sugar will be taxed according to their content across categories, and that beverages are not singled out. We are hopeful GST will be levied on the basis of sugar content, not on the basis of carbonation,” Kini had told ET in an interview last week.
Coca-Cola has also said in the recent past that it wants the roll out of the GST to be postponed by a couple of months.
“A higher tax at this juncture, when aerated drinks makers are facing slowing growth, will significantly impact the category’s revival. It will lead to higher consumer prices when the concerned companies are pushing volumes and launching smaller packs,” a top bottling official said.
Aerated drinks companies are pushing for a differentiated tax structure based on sugar content instead of carbonation. “The category is neither a luxury nor a sin product. So the higher taxation is not justified,” the bottling official quoted earlier said.
India is considered a critical and high-potential country for Coa-Cola, given its low penetration of packaged soft drinks. The company has been attempting to re-invent its portfolio to include teas, flavoured waters, and dairy to respond to changing urban consumer preferences for low sugar drinks.
News Source - Economic Times