AP chambers seeks GST rate reduction on fruit beverages, hospitality sector and exhibitions - Times of India

Vijayawada: Hailing the GST 2.0 reforms announced by the Union govt, the AP Chambers of Commerce Industry Federation (AP Chambers) submitted a representation to the GST Council chairman and Union finance minister Nirmala Sitharaman, highlighting issues requiring reconsideration in view of decisions taken in the 56th GST Council meeting.In their representation, the AP Chambers mentioned: "Carbonated beverages of fruit drink or carbonated beverages with fruit juice have now been placed under a 40 per cent GST rate (including cess). This classification inadvertently covers a large number of fruit pulp-based beverages manufactured by medium and small-scale industries across India, particularly in agrarian states like Andhra Pradesh, Tamil Nadu, and Maharashtra.

""These products, though mildly aerated, are made from real fruit pulp and natural extracts, supporting farmers, fruit processors, and MSME units engaged in agro-based manufacturing. Keeping them at par with high-caffeine or synthetic drinks such as cola and soda variants not only discourages the consumption of healthier alternatives but also adversely impacts the agri-processing ecosystem," the AP Chambers said in its representation and urged the Centre to reduce the GST rate on fruit pulp-based aerated beverages ideally to 18 per cent, in line with other processed food products.

With regard to the hospitality sector, AP Chambers mentioned that under GST 2.0, the GST rate for rooms with a tariff up to Rs 7,500 was reduced from 12 per cent to 5 per cent. But the corresponding withdrawal of Input Tax Credit (ITC) created severe financial hardship for hoteliers and tourism operators.The Chambers stated: "The hospitality sector incurs substantial input costs on capital goods and housekeeping consumables, most of which attract 18% GST.

The denial of ITC on these inputs leads to a classic case of inverted duty structure, resulting in increased cost of service delivery, embedded taxes and double taxation, and potential rise in room tariffs, negating the very intent of GST 2.0 simplification."AP Chambers requested the govt to permit ITC or provide a refund mechanism for accumulated input credits to avoid cascading of taxes and maintain parity in effective tax incidence for the hospitality industry.Besides these, AP Chambers requested the GST Council to reduce the GST rate charged for exhibitors participating in business exhibitions from 18% to 5%. The Chambers also requested that the GST rate on membership fees of industry bodies and NGOs be reduced from 18% to 5%.