Are Beverage Giants Adding Juice To Their Drinks To Evade GST?

Sometime last year, Prime Minister Narendra Modi suggested that multinational beverage giants should include 2 per cent fruit juice in aerated beverages to make them healthier and also in a bid to incorporate farmers’ produce. Well, looks like the soda companies are finally listening to him, albeit a completely different reason – to cut down on the recently imposed goods and services tax, a.k.a. GST. (Although, to be fair, Coke did re-launch Fanta with 5 per cent locally procured orange juice content.

That’s right, according to a recent report, domestic beverage companies are thinking of adding fruit juices to their carbonated drinks in an attempt to lower the GST weight.

As per regulations, soda like Coca Cola, Pepsi, and Sprite are liable to a 40% tax under GST, and on the other hand beverages based on fruit pulp or fruit juice fall in the 12% tax bracket.

“It could prove to be a good move, especially since colas have been hammered across the world over health concerns,” said Rajat Wahi, partner, management consulting, at Deloitte India, in favour of the move. “So, anything that could add a health angle to fizzy drinks will give a leg up to the industry.”

We could agree with Mr. Wahi but wouldn’t that make most of us mere hypocrites? Because most of us did laugh off Modi’s (then) absurd suggestion, which might make complete sense for some now. That said, we can’t help but point out that the GST bill may just play in favour of our health!