CAIT Calls For Lower GST Rate On Beverages To Boost Small Retailers’ Income
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CAIT Calls For Lower GST Rate On Beverages To Boost Small Retailers’ Income

The Confederation of All India Traders (CAIT) urged finance minister Nirmala Sitharaman for a reduction in the goods and services Tax (GST) rate on beverages.

Currently, beverages are subjected to a GST rate of 40 per cent, which includes GST plus Cess, significantly impacting the working capital of small retailers.

B.C. Bhartia, CAIT National President and Praveen Khandewal, Secretary General have appealed to union finance minister Nirmala Sitharaman to lower the tax rate on beverages, highlighting that it constitutes approximately 30 per cent of the total turnover of small shops.

They emphasised that a rational reduction in the GST rate would not only boost the turnover of small shops but also generate higher revenue for both the central and state governments.

A study conducted by CAIT in collaboration with Hansa Research has revealed that minor adjustments in the GST structure can have a substantial positive impact on retailers’ income, providing them with greater working capital to expand their businesses. This, in turn, can drive higher sales growth, leading to a significant increase in GST revenues.

Bhartia and Khandewal said that CAIT would launch a national campaign involving various stakeholders, including farmers, transporters, SMEs, women entrepreneurs, consumers, and hawkers, to create an alliance and collectively appeal to the Central and state governments. Memorandums will be presented to chief ministers and finance ministers of all states, urging them to lower the tax rate on beverages.

They said that India should propose a Sugar Based Tax (SBT) system, where tax slabs are proportionate to the sugar content in products. Under this system, beverages with low or no sugar would attract reduced taxes, freeing up capital for retailers to increase their purchases, boost sales, and double their incomes. Such a system would not only benefit retailers but also significantly reduce household costs for consumers.

CAIT’s proposal aligns with the recommendations of the Economic Survey of 2023, which suggests a shift from Food Security to Nutritional Security. The proposed sugar-based taxation system plays a crucial role in achieving this objective. Beverages, being an essential commodity, do not fall under the category of sin tax, luxury goods, or demerit products.

In line with their vision, CAIT, in collaboration with Hansa Research, has released a white paper titled “Doubling Retailers’ Income through Focus on the Beverages Sector,” discussing the potential benefits and strategies for achieving this goal.

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