Revised GST Brackets for Non-Alcoholic Beverages: Healthy Drinks at 5%, Sugary Beverages at 40%

Effective May 1 2026, the Indian government rolled out a revised Goods and Services Tax (GST) framework for non-alcoholic beverages under Notification 01/2026-CT(R). The new structure creates a clear distinction between “healthy” and “demerit” drinks:

5 % GST bracket – Applies to beverages that are primarily fruit-based or marketed as healthy, such as fresh fruit juices, herbal infusions, and low-calorie drinks.

40 % GST bracket – Applies to sugary, carbonated, and caffeinated drinks, including ready-to-drink mocktails. This higher rate is intended to discourage consumption of high-sugar and high-caffeine beverages.

Key points of the notification:

1. No compensation cess is added to the 40 % rate, keeping the tax straightforward for manufacturers.

2. The 5 % bracket encourages producers to develop and market healthier beverage options.

3. The policy aligns with public health objectives aimed at reducing sugar-related health issues.

Industry stakeholders are advised to review their product formulations and pricing strategies to comply with the new rates. Companies producing beverages that straddle the boundary—such as lightly sweetened fruit drinks—should carefully evaluate ingredient lists to determine the applicable tax bracket.

For further details, consult the full Notification 01/2026-CT(R) published on the Ministry of Finance website.