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Jul, 04 2017

Restaurants and stores implies different taxes on carbonated drinks

However, a 600ml bottle of a cola brand in a food joint cost Rs 60, with GST component cited at 18%. But the same sized bottle is available in a departmental store for Rs 35, though the GST cited is 40%.

The government’s move to tax fizzy drinks at 40% under Goods and Services Tax (GST) regime is being defeated at food joints, including branded chains. The peak GST rate of 28% is applicable to these drinks, with further 12% cess. The special cess is charged on carbonated cold drinks like Coke or Pepsi, to discourage consumption.

However, a 600ml bottle of a cola brand in a food joint cost Rs 60, with GST component cited at 18%. But the same sized bottle is available in a departmental store for Rs 35, though the GST cited is 40%.

The whole idea of having a higher tax on the drinks is being defeated because MRP has not been changed at both places so there is no difference for consumers. The peak rate is one of the measures to discourage consumption of such drinks considering their ill effect on health. Apart from this, the 12% cess, which goes to the Centre, is used to compensate states to make good the shortfall in revenue after shifting to GST.

Food joints generally charge a higher rate to account for other services provided along with the product. According to experts, this is because food joints include the drinks as a part of services offered from their end. The 18% GST applicable to their category of businesses is added on as the tax.

Malls and other outlets, on the other hand, sell carbonated drinks as individual products. So, the specific GST rate of 40% applicable on carbonated drinks is cited at such places.

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