Hike in GST rates on caffeinated drinks would have minimal impact: Varun Beverages

PepsiCo India's bottling partner Varun Beverages on Monday said the recent hike in GST rates for caffeinated drinks would have a "minimal" effect on the company. The GST Council headed by Union Finance Minister Nirmala Sitharaman in its meeting on Friday decided to charge caffeinated beverages with 28 per cent tax plus a 12 per cent compensation cess in place of the current tax rate of 18 per cent.

"With regard to the increase in GST rates for caffeinated drinks, the effect on Varun Beverages is expected to be minimal as the incremental volumes that will come under the higher GST bracket was approximately 0.7 million cases out of 340 million cases of sales volume based upon CY 2018," the company said in a regulatory filing. According to Varun Beverages, the corresponding volume of the first half (January-June) of the calender year 2019 is 0.6 million cases out of 285.8 million cases.

The company has also welcomed the reduction in corporate tax rates and said this provides an impetus to drive economic growth rates.