Key Takeaways
- Unbranded water is exempt from GST, while packaged water attracts different GST rates based on type.
- Tender coconut water is taxed at 5% if unbranded and unpackaged.
- Packaged drinking water generally falls under the 12% GST rate.
- Mineral and aerated water are taxed at 18%.
- Consumer rights include vigilance against overcharging and demanding clarity on service charges and bundled services.
Water is essential for life, and its availability in various forms like mineral water, aerated water, and tender coconut water has made it a staple commodity. In this blog, we’ll explore the GST rates applicable to different water and water-based products, including some common issues and consumer rights related to these products.
GST Rates on Water and Related Products
NIL GST Rate
- Unbranded Drinking Water: Water supplied through unbranded sources, including municipal water supply, is exempt from GST.
- Natural Water: Water other than aerated, mineral, or drinking water, which is not branded and sold as potable water, also falls under the NIL GST category.
5% GST Rate
- Water: Natural water or drinking water sold in unsealed containers or through pipelines typically attracts a 5% GST rate.
- Tender Coconut Water: Unbranded and unpackaged tender coconut water is also taxed at 5%.
12% GST Rate
- Packaged Drinking Water: Drinking water bottle that is not carbonated or mineral water is usually taxed at a 12% GST rate.
- Non-Alcoholic Beverages: Certain non-alcoholic beverages, excluding those specifically mentioned under higher tax brackets, also attract a 12% GST.
18% GST Rate
- Mineral and Aerated Water: Packaged mineral water and aerated water attract an 18% GST rate. This includes all forms of carbonated water and flavored water.
28% GST Rate
- Specialty Non-Alcoholic Beverages: Certain high-end non-alcoholic beverages, such as energy drinks, attract the highest GST slab of 28%.
Key HSN Codes for Water and Related Products
| HSN Code | Type of Product | CGST Rate (%) | SGST Rate (%) | IGST Rate (%) | Compensation Cess (%) |
| 2201 | Water, excluding aerated, mineral, purified, distilled, medicinal, ionic, battery, demineralized, and water sold in sealed container | 0 | 0 | 0 | – |
| 2201 | Non-alcoholic Toddy, Neera including date and palm neera | 0 | 0 | 0 | – |
| 2202 90 90 | Non-branded tender coconut water, which are not put in a unit container | 0 | 0 | 0 | – |
| 2201 90 10 | Ice and snow | 2.5 | 2.5 | 5 | – |
| 2845 | Heavy water | 2.5 | 2.5 | 5 | – |
| 2201 | Drinking water (20 L bottles) | 6 | 6 | 12 | – |
| 2202 99 90 | Branded tender coconut water when put up in a container | 6 | 6 | 12 | – |
| 28 | Steam | 6 | 6 | 12 | – |
| 2202 10 20 | Lemonade | – | – | – | 12 |
| 2202 10 10 | Aerated water | – | – | – | 12 |
| 2201 | Natural and artificial mineral water, and aerated water with no added sugar/other sweetening or flavouring agents | 9 | 9 | 18 | – |
| 2202 91 00, 2202 99 90 | Non-alcoholic beverages, excluding tender coconut water | 9 | 9 | 18 | – |
| 2202 10 | All goods, including aerated water, with added sugar or other sweetening and flavouring agents | 14 | 14 | 28 | – |
Common Issues and Consumer Rights
- Overcharging in Restaurants
- Restaurants have been penalized for charging extra GST on mineral water bottles beyond the MRP. Consumers must be vigilant and report any overcharging instances to the Consumer Forum.
- Labeling and Maximum Retail Price (MRP)
- All bottled water products must clearly state the MRP and GST included. Any discrepancies can be reported to the consumer protection authorities.
- Service Charge in Restaurants
- Service charges are often added to bills in restaurants, but they should be clearly distinguished from GST. The service charge is not a government tax and is optional. Consumers can refuse to pay it if they feel it is unjustified.
- Bundled Services
- Some restaurants bundle water and other services under a single charge, which can sometimes lead to confusion about the applicable GST rates. It’s important to ask for a detailed bill to understand the individual charges.
Restaurant penalised for charging Rs.15 extra GST on Mineral Water Bottle
A recent incident saw a restaurant penalized for charging an additional Rs.15 as GST on a mineral water bottle, highlighting significant issues around consumer rights and compliance with GST regulations. A customer filed the case with the District Consumer Dispute Redressal Forum, alleging that the restaurant had overcharged and failed to follow the Maximum Retail Price (MRP) guidelines.
The forum found the restaurant guilty of this practice and imposed a penalty, stressing the necessity for strict compliance with GST laws and consumer protection regulations. This incident underscores the importance for restaurants to ensure their billing practices are in line with legal requirements, including correct labeling and adherence to the MRP of bottled products.
It serves as a cautionary tale for businesses to stay vigilant about GST compliance to avoid legal repercussions and maintain consumer trust.
Conclusion
Having knowledge of the GST rates on water and related products helps consumers make informed choices and ensures compliance by sellers. Whether it’s bottled water or a beverage in a restaurant, knowing the correct GST rate can help avoid overcharging and ensure fair trade practices.
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FAQs
What is the GST rate on unbranded drinking water?
Unbranded drinking water supplied through municipal sources or other unbranded sources is exempt from GST, falling under the NIL GST rate category.
How is tender coconut water taxed under GST?
Unbranded and unpackaged tender coconut water is taxed at a 5% GST rate. However, if it is branded and packaged, it attracts a 12% GST rate.
Are restaurants allowed to charge GST on bottled water beyond the MRP?
No, restaurants cannot charge GST on bottled water beyond the MRP. Overcharging beyond the MRP is illegal, and consumers can report such instances to the Consumer Forum.
What should consumers do if they are charged a service charge along with GST in a restaurant?
Service charges are optional and should be distinguished from GST. Consumers have the right to refuse to pay the service charge if they feel it is unjustified. Service charges are not a government tax.
How can consumers ensure they are not being overcharged for water and related products?
Consumers should check the labeling for MRP and included GST on bottled water products. They should also ask for detailed bills in restaurants to understand individual charges and report any discrepancies to consumer protection authorities.
