GST Rate and HSN Code for Beverages, Spirits, Vinegar and Cold drinks - Chapter 22 The Indirect tax structure of India has been remarkably simplified by the introduction of a unified goods and services taxation system, which comprises an assortment of goods and services. Businesses operating in the instructional realm of beverages, spirits, vinegar, and cold drinks are required to note the appropriate GST rates and HSN codes under Chapter 22 for perfect compliance with the tax obligations of the nation. HSN Codes (Harmonized System of Nomenclature) is an accepted blend and a system classification that is internationally accepted. Tax avoidance and misclassification that attract penalties are fully avoided with the correct application of HSN codes. This guide will explain the various HSN codes and GST rates set for water, soft drinks, alcohol, spirits and even vinegar. HSN Codes and GST Rates for Beverages and Spirits 1. Packaged Drinking Water & Mineral Water (HSN Code: 2201) This category covers natural and artificial mineral water and aerated water , including packaged drinking water.
HSN Code Description GST Rate 2201 Water, including natural or artificial mineral water, aerated water (without added sugar) 18% 2201 10 10 Mineral water 18% 2201 10 20 Aerated water (unsweetened) 18% 2201 90 10 Ice and snow 5% 2201 90 90 Other types of packaged drinking water 18%
Note: Unbranded or loose drinking water is exempt from GST .
2. Cold Drinks and Non-Alcoholic Beverages (HSN Code: 2202) Non-alcoholic beverages include aerated drinks, soft drinks, flavoured drinks, and energy drinks .
HSN Code Description GST Rate 2202 Beverages containing added sugar, artificial flavours, or sweeteners 28% 2202 10 10 Aerated soft drinks (Coca-Cola, Pepsi, etc.) 28% + 12% cess 2202 10 20 Lemonade and flavoured soft drinks 28% 2202 90 10 Soya milk drinks 12% 2202 90 20 Fruit juice-based drinks (Mango Frooti, Maaza, etc.) 12% 2202 90 30 Milk-based beverages (Flavored milk, Badam Milk, etc.) 12%
Note: Tender coconut water in unbranded form is GST exempt , while branded packaged coconut water is taxed at 5% .
3. Alcoholic Beverages (HSN Code: 2203 - 2206) Alcoholic beverages, including beer, wine, whisky, rum, vodka, and other spirits , fall under state-level excise duties , but GST applies to related services and inputs .
Beer (HSN Code: 2203) HSN Code Description GST Rate 2203 Beer made from malt GST not applicable (Excise duty levied by states)
Wine (HSN Code: 2204) HSN Code Description GST Rate 2204 Wine of fresh grapes, including fortified wines GST not applicable
Hard Liquor (Whisky, Rum, Vodka) - (HSN Code: 2208) HSN Code Description GST Rate 2208 Undenatured ethyl alcohol (alcohol content above 80%) GST exempt 2208 20 00 Spirits obtained by distillation (Whisky, Vodka, Rum, etc.) Excise duty levied by states
4. Vinegar (HSN Code: 2209) Vinegar and substitutes for vinegar obtained from acetic acid fall under this category.
HSN Code Description GST Rate 2209 Vinegar and substitutes made from acetic acid 12%
Impact of GST on the Beverage Industry The introduction of GST has created ripples throughout the beverage sector, which impacts costs, demand, and overall market growth. While some segments enjoy low tax rates, others suffer high expenses that stem from the imposition of new taxes. This is the impact of different types of GST on severed beverage segments and the industry at large:
Increased Tax on Aerated Drinks: GST on aerated drinks of 28%, along with a 12% Ces,s has caused drinks to be more expensive, which in turn reduces demand.
Alcohol Is Not Covered by GST: Alcoholic beverages continue to be covered by excise duties put by the state with no GST on those products.
Reduced GST for Fruit Juices & Milk-Based Drinks : Life juices, as well as milk-based beverages, are taxed at 12% which motivates better health choices.
GST On Packing And The Supply Chain: Only the raw materials portion, packing, transport, adverts, etc., attract GST, and so it has a wide impact on beverage manufacturers’ overall price setting.
GST Compliance for Beverage Businesses To avoid disciplinary action and ensure efficient processes, adherence to GST compliance is of utmost importance for beverage companies. Proper tax classification is only one of the many regulations that control invoicing as well. A beverage industry company needs to pay special attention to the following compliance aspects:
Accurate HSN Code Classification: Make sure that your HSN code classification is accurate so that you do not incur penalties.
Appropriate GST Invoice Issuance: Invoices provided must have GSTIN, the proportion of tax applied and appropriate HSN codes.
ITC: Both manufacturers and traders can apply for ITC against expenses for raw materials and transportation.
State Excise Compliance: Companies dealing With Alcohol are to comply with State Level Excise Compliance.
Conclusion Knowing the GST rates and HSN codes for beverages, spirits, vinegar, and soft drinks is necessary for manufacturers, traders, and retailers. While aerated drinks attract the highest GST, fruit juices and milk-based drinks are placed in a lower tax bracket. Alcoholic beverages are completely out of GST as they are governed under the state’s excise laws. In any business, there is a need to classify, invoice properly, and follow the state laws to avoid getting penalized. With the right tax planning and strategies, the beverage industry can price its goods competitively while still enjoying ample profits.
FAQs 1. What is the GST rate on aerated drinks and soft drinks? Aerated and soft drinks are among the most heavily taxed drinks under GST as they attract 28% GST plus a 12% compensation cess.
2. Are alcohol and spirits covered under GST? No, alcoholic beverages such as whisky, rum, vodka, and beer are not covered under GST. They incur state excise duties. GST applies only to the inputs, which include packaging, transportation and manufacturing machinery.
3. What is the GST rate on packaged drinking water and mineral water? The GST on packaged drinking water and packaged mineral water is 18,% whereas unbranded or loose drinking water is exempted from tax.
4. What is the HSN code for fruit juice-based drinks and their GST rate? Items such as Mango Frooti and Maaza which are produced from fruit juice are classified under HSN Code 2202 90 20 and are stated to be subject to a GST of 12% which is sub-classified in a broader category.
5. Is GST applicable on vinegar? Vinegar and its substitutes made out of acetic acid are classified under HSN Code 2209 and are liable to pay 12% GST.
People Also Ask 1. What is the HSN code for packaged drinking water and its GST rate? Packaged drinking water and mineral water fall under HSN Code 2201 and attract 18% GST . Unbranded or loose drinking water is fully exempt from GST.
2. What is the GST rate on aerated drinks and soft drinks? Aerated drinks, carbonated beverages, and soft drinks are taxed at 28% GST + 12% Compensation Cess , making them one of the highest-taxed items under GST.
3. Is GST applicable on alcoholic beverages like whisky, rum, and beer? No, alcoholic beverages (HSN 2203 to 2208) are kept outside the purview of GST and continue to attract state excise duties . However, GST applies to inputs such as packaging, transport, and marketing costs.
4. What is the GST rate for fruit juices and milk-based beverages? Fruit juices and milk-based drinks (classified under HSN Code 2202 ) are taxed at 12% GST , encouraging healthier beverage choices.
5. What is the HSN code and GST rate for vinegar? Vinegar and substitutes obtained from acetic acid are classified under HSN Code 2209 and attract 12% GST .
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