Effective September 22, 2025, the GST rate for Coca-Cola and similar carbonated, caffeinated, or sugar-sweetened beverages in India has been revised to a total of 40%, replacing the previous 28% GST + 12% compensation cess structure. This 40% rate applies to aerated waters and sugary, non-alcoholic drinks to discourage their consumption.
The 40% GST is now a single consolidated rate for sugar-added, flavoured, or carbonated drinks, including cola, lemonade, and fruit-based fizzy beverages. The previous 12% compensation cess has been removed.
What is the GST rate on cold drinks? The cold drinks GST rate is 28% GST + 12% Compensation Cess, totaling 40% tax. Are fruit juices taxed at the same rate as cola? No.
This tax hike is part of a series of GST reforms. The council also increased the tax on carbonated fruit drinks and those with fruit juice to 40% from 28%. Additionally, all goods with added sugar, sweeteners, or flavorings, including aerated waters, will now be taxed at 40% instead of 28%.
For any standard-rated supplies of goods or services that you make on or after 1 Jan 2024, you must charge GST at 9%. For instance, if you issue an invoice and receive payments for your supply on or after 1 Jan 2024, you must account for GST at 9%.
"Based on the requirement for payment to be received in full within this period, the specific timing constraints and our billing processes, PepsiCo Canada will continue charging GST/HST on qualifying products," said the letter obtained by the Western Standard.
Consumers of 40% gst items- “sin” goods: tobacco, pan masala, sugary drinks, premium beverages etc. will face higher GST. Businesses involved in manufacturing & retail of such goods will have to adjust their margins, possibly reduce consumption.
However, many carbonated and caffeinated drinks jump to 40% GST. Below we explain which food and drink items are affected, how their tax rates change, and what this means for shoppers and businesses.
Generally, basic foodstuffs are GST-free, while prepared meals, snacks, and beverages are taxable.
The GST rate for 7up is the same as for all cold drinks, which is 40%.
GST Slabs for Food & Restaurant (2025)
The majority of food items fall under the 5% GST slab. However, under the GST 2.0 reform, restaurants within hotels are now classified as 'specified premises' and are subject to 18% GST. Standalone restaurants, on the other hand, can choose between charging 5% GST or 18% GST.
GST number of Coca Cola India Private Limited is 27AAACB8573G1ZJ.
On April 1, 2025, the Bombay High Court granted interim relief to Hindustan Coca-Cola Beverages Pvt. Ltd. (HCCB), staying a Rs. 2,500 crore GST demand by tax authorities.
By zero rating it is meant that the entire value chain of the supply is exempt from tax. This means that in case of zero rating, not only is the output exempt from payment of tax, there is no bar on taking/availing credit of taxes paid on the input side for making/providing the output supply.
Key Categories of Goods under 40% GST Slab
Key items exempted from GST:
GST Amount = (Selling Price x GST Rate) / 100. Here, the Selling Price is determined by adding the Cost Price and Profit Amount. The calculator factors in the Selling Price, representing the total value of goods or services subject to GST, and the GST rate, which fluctuates based on the nature of the goods or services.
Businesses dealing in goods are exempt from GST if their annual aggregate turnover is below INR 40 lakhs. For businesses in hilly and northeastern states, this threshold is reduced to INR 20 lakhs to address regional challenges. Service providers are exempt from GST if their turnover is under INR 20 lakhs annually.
GST reduces tax burden through input tax credits, lowers logistics costs by eliminating state entry taxes, and creates a uniform market across India. It also simplifies tax compliance with an online filing system, making it easier for businesses to operate.
PepsiCo has attributed the closures to “business needs” while citing broader efforts to optimize its cost structure. In earnings calls, executives referenced integrating operations, reducing redundant logistics, increasing automation, and centralizing production as strategies behind the consolidations.
Michael Jackson however said he would not drink Pepsi, hold the can, and that his face could only appear in commercials for three-seconds at a time. Michael donated the $1.5 million he received from Pepsi to the Michael Jackson Burn Center for children. R.I.P.
Under GST 2.0, items such as carbonated fruit drinks, caffeinated beverages, fizzy energy drinks, fruit-juice-based fizzy beverages, non-alcoholic flavoured drinks, and all aerated waters containing added sugar or sweeteners will now attract 40% GST and no cess. Previously, it used to be 28% GST plus a 12% cess.