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CAIT for cut in GST rate on beverages; releases white paper
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Tuesday, 23 May, 2023, 08 : 00 AM [IST]
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Aanchal Chaudhary, Mumbai
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The Confederation of All India Traders (CAIT) has advocated for a reduction in the Goods and Services Tax (GST) rate on beverages.
While releasing a White Paper in Mumbai on Monday, CAIT highlighted that the current GST tax rate, which includes both GST and Cess, amounts to 40% for beverages.
CAIT, while addressing the press, has stated that this high tax rate significantly hampers the working capital of small retailers, as beverages constitute nearly 30% of their total turnover.
B.C. Bhartia, the national president of CAIT, and Praveen Khandelwal, the secretary-general, explained that lowering the GST rate on beverages would not only increase the turnover of small shops but also generate more revenue for both the Central and State Governments.
A study conducted by CAIT in collaboration with Hansa Research further revealed that minor adjustments to the GST structure could have a substantial positive impact on retailers' income, providing them with more working capital to expand their businesses.
Shankar Thakkar, secretary, CAIT Maharashtra, said that in this pursuit, the CAIT will launch a national campaign amongst the stakeholders and citizens of the country which will forge an alliance with various other verticals of economy like farmers, transporters, SMEs, women entrepreneurs, consumers, hawkers etc. to impress upon both Central Government and State Governments through presenting memorandums to Chief Ministers and Finance Ministers of all States, to lower down the tax rate on beverages.
Proposing a shift to a Sugar Based Tax (SBT) system, the trade leaders emphasised the need for tax slabs to be proportional to the sugar content in products. Under this system, higher-sugar products would be subject to higher taxes, while beverages in the low and no sugar categories would experience reduced taxes. This approach would release capital for retailers to make additional purchases, increase sales, and double their incomes. Additionally, it would significantly benefit consumers by reducing household costs.
In collaboration with Hansa Research, CAIT has released a white paper titled "Doubling Retailers' Income through Focus on the Beverages Sector" to further support their vision. The paper highlights how the current high tax rate, particularly in the beverages category, burdens the common man and restricts the working capital of small traders. It also emphasises how tax rationalisation can contribute to government revenue growth and facilitate the transition of the unorganised and counterfeit economy to a formal one, attracting more investments to the country.
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