Cut GST on small bottles: Packaged water companies

NEW DELHI: It’s not just carbonated beverages that have hit the headlines over the proposed sin tax, packaged water is also now in focus.
The packaged water industry feels encouraged by the potential GST rationalisation on 20 litre pack, but urged that it be extended to smaller sizes as well. In Oct, the GoM on GST rate rationalisation proposed lowering tax rates on packaged drinking water of 20 litres and above to 5% from existing 12%. If the GoM recommendation is accepted by the GST Council later this month, the GST rates would be reduced on the 20 litre packaged drinking water.
Smaller pack sizes are taxed at a higher rate of 18%, as against the lower tax of 12% on 20 litre and above bottles. “The GST reduction would benefit more consumers if it is done on smaller packs of 1, 2 and 5 litres as these are consumed by families,’’ an industry representative told TOI, adding “we have heard that GoM recommendation could be accepted by the GST Council on Dec 22, hence the renewed appeal on small sizes.”
In its recent representation to govt, the Indian Beverage Association (IBA) urged to lower GST rate to 5% saying that high rate of 18% means water is treated as a luxury item. The GST rates on water are comparable to other highly taxed beverages, though it’s a necessity.
“Clean and safe drinking water is a scarce commodity and should be made available at an affordable price. The limited availability of affordable clean drinking water in India is a primary reason for the high vulnerability of the population to increasing waterborne diseases. The high cost of packaged water due to taxes and logistics hampers affordability. Further, low margins in business exacerbate the problem,” IBA said.