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May, 20 2017

Soft drinks companies likely to be the hardest hit under the new GST structure

Within confectionery, taxation will go up to 18% from 15% for candy, and to 28% from about 22% for gums.

Prices within the Rs 22,000-crore soft drinks industry will be up between 5-10% under the new GST structure.

As per the goods and services tax rates finalised by the GST council, soft drinks will attract 40% up from the existing 32%.

Within confectionery, taxation will go up to 18% from 15% for candy, and to 28% from about 22% for gums.

A top official in a soft drinks firm, said, “Prices will go up and demand could drop. Further, there’s no incentive for low sugar beverages. In the past three years, taxation on soft drinks has gone up 12%.”

A statement on behalf of Coca-Cola and PepsiCo, issued by Indian Beverage Association (IBA), said, “The companies were extremely disappointed, and that the move would have a negative ripple effect on bottlers, retailers and distributors.”

Another industry official said the two major players are facing slowing sales because of lower consumer spending on discretionary products and competition from small, regional brands selling 15-30% cheaper.

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