Looking for expert help with Soda GST rate and HSN code? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Key Takeaways
- Sweetened or flavoured drinks of HSN 2202 10, including goli soda, masala soda and cola, are 40% GST (Notification 9/2025-CT(R), Schedule III, S. No. 1). Carbonated fruit drinks and caffeinated drinks are also 40%.
- Plain soda water (2201, no sugar, no flavour) and fruit juice (2009) are 5%. So are non-carbonated fruit drinks and milk-based drinks.
- The old 12% compensation cess on 2202 10 drinks is nil from 22 September 2025.
- Aerated water makers can't opt for composition. Juice makers can, and on the regular scheme they may get an inverted duty refund on 18% bottles.
- For income tax, 44AD (Section 58 from 1 April 2026) covers turnover up to Rs 2 crore or Rs 3 crore. Don't take Rs 2 lakh or more in cash from one buyer for one deal.
What is the GST rate and HSN code for soda? Flavoured or sweetened soda, including goli soda and cola, falls under HSN 2202 10 and is taxed at 40% GST (20% CGST plus 20% SGST) under Schedule III, S. No. 1 of Notification 9/2025-Central Tax (Rate), from 22 September 2025. Plain soda water with no sugar or flavour stays under HSN 2201 at 5%.
Picture a small bottling unit outside town. One line fills goli soda in green marble-neck bottles. Another fills 200 ml PET bottles of mango drink, and in summer the owner adds plain soda for bars and hotels. Three products from one shed, and three different GST answers: 40%, 5% and 5%. Bill the mango drink at 40% and you lose orders; bill the goli soda at 5% and you'll get a notice for the difference plus interest. This post covers the GST rate on each kind of drink, what you pay on inputs, composition and refunds, and income tax for FY 2025-26 (AY 2026-27) under the Income-tax Act 1961, with the Income-tax Act 2025 sections that apply from 1 April 2026. It's for soda, soft drink and juice makers and the CAs who file for them. If you make drinks to order at a juice counter, see our restaurant and cafe tax guide instead.
What GST rate applies to your drink?
It depends on three questions, in this order: is it plain water or a drink, is it carbonated, and what's in it. Notification 9/2025-Central Tax (Rate), in force from 22 September 2025, sets the rates. Notification 1/2026-Central Tax (Rate) changed only the tariff codes for some 2202 99 entries from 1 May 2026, to match the new Customs Tariff subheadings. The rates stayed the same.
Tax Rate Chart
GST on Soft Drinks, Soda and Juices (from 22 September 2025)
Goli soda, masala soda, cola and other sweetened or flavoured aerated drinks (2202 10)
Schedule III, S. No. 1
Carbonated fruit drinks and carbonated drinks with fruit juice (2202)
Schedule III, S. No. 4
Caffeinated beverages, including energy drinks (2202 99 91, 2202 99 99)
Schedule III, S. No. 3
Plain soda water: aerated, no sugar, no flavour (2201)
Schedule I, S. No. 146
Fruit and vegetable juices (2009)
Schedule I, S. No. 133
Non-carbonated fruit pulp or fruit juice based drinks (2202 99 21, 2202 99 29)
Schedule I, S. No. 150
Beverages containing milk (2202 99 31, 2202 99 39)
Schedule I, S. No. 151
Source: CBIC Notification 9/2025-Central Tax (Rate), 17 September 2025; tariff codes as substituted by Notification 1/2026-Central Tax (Rate) from 1 May 2026
Why goli soda is 40%. Schedule III, S. No. 1 covers "all goods (including aerated waters), containing added sugar or other sweetening matter or flavoured" under 2202 10. A marble-neck bottle of lemon or orange soda has sugar and flavour, so it's in. The same bottle filled with only carbonated water and nothing else is 2201 at 5%. A pinch of black salt and jeera powder is a flavour, so masala soda is 40%.
Why a fizzy mango drink is 40% but a still one is 5%. Schedule I, S. No. 150 gives 5% to fruit pulp or fruit juice based drinks, but the entry itself excludes "Carbonated Beverages of Fruit Drink or Carbonated Beverages with Fruit Juice". Those sit in Schedule III, S. No. 4 at 40%. Add CO2 to the line and the rate jumps eightfold.
Squash and sharbat concentrate. Fruit squash of mango, lemon, orange, pineapple and other fruits is named in Schedule I, S. No. 132 (heading 2008) at 5%. Tender coconut water, pre-packaged and labelled, is S. No. 134 at 5%.
No more cess. Before GST 2.0, Notification 1/2017-Compensation Cess (Rate) charged 12% cess on aerated waters (2202 10 10), lemonade (2202 10 20) and other 2202 10 drinks (S. Nos. 2, 3 and 4). Notification 2/2025-Compensation Cess (Rate) set all three to nil from 22 September 2025. If your billing software still adds a cess line, remove it.
Pricing example. You sell goli soda to shops at Rs 10 a bottle before tax. GST at 40% is Rs 4 (Rs 2 CGST plus Rs 2 SGST), so the shop pays Rs 14. If the shop insists on Rs 10 all-in, your taxable value is Rs 10 divided by 1.40, which is Rs 7.14, and GST is Rs 2.86. That's a big bite out of a small-margin product, so price for it rather than absorbing it.
GST on what you buy, and how credit works
Comparison
GST on Common Inputs for Soda and Juice Units (from 22 September 2025)
| Input (HSN) | GST | Notification 9/2025-CT(R) entry |
|---|---|---|
| Cane sugar (1701) | 5% | Schedule I, S. No. 105 |
| Flavours and essences for industry (3302) | 18% | Schedule II, S. No. 59 |
| PET bottles, preforms, plastic caps and closures (3923) | 18% | Schedule II, S. No. 124 |
| Glass bottles and jars (7010) | 18% | Schedule II, S. No. 250 |
| Crown corks and metal caps (8309) | 18% | Schedule II, S. No. 383 |
| Bottle washing, filling, capping and labelling machines (8422) | 18% | Schedule II, S. No. 411 |
| Juice presses and crushers (8435) | 18% | Schedule II, S. No. 423 |
Source: CBIC Notification 9/2025-Central Tax (Rate), 17 September 2025, in force 22 September 2025
For a 40% soda line, credit isn't the problem. Your output rate is far above every input rate, so credit on sugar, flavours, bottles and caps gets used up each month and you pay the rest in cash.
Example: in a month you sell goli soda worth Rs 5,00,000 before tax. Output GST at 40% is Rs 2,00,000. You bought sugar for Rs 60,000 (Rs 3,000 GST at 5%), flavours for Rs 40,000 (Rs 7,200 at 18%), crown caps for Rs 20,000 (Rs 3,600 at 18%) and new bottles for Rs 50,000 (Rs 9,000 at 18%). Total credit is Rs 22,800, so you pay Rs 1,77,200 in cash through GSTR-3B.
For a 5% juice line, credit can pile up. Fresh fruit is usually bought from farmers with no GST to claim, but PET bottles and caps are 18%, and the juice goes out at 5%. Section 54(3)(ii) of the CGST Act allows refund of credit that accumulates because "rate of tax on inputs" is higher than the rate on output supplies. Rule 89(5) of the CGST Rules sets the formula, and its "Net ITC" counts credit on inputs only. GST on rent, repairs, transport services or a new filling machine doesn't go into the refund.
Example: a juice unit sells Rs 10,00,000 of bottled juice in a quarter, all at 5%, so output GST is Rs 50,000. It bought PET bottles for Rs 3,00,000 (Rs 54,000 GST), caps for Rs 50,000 (Rs 9,000) and sugar for Rs 1,00,000 (Rs 5,000). Net ITC on inputs is Rs 68,000. With no input services in the period, the Rule 89(5) maximum is Rs 68,000 (all turnover is the inverted supply, so the first part equals Net ITC) less Rs 50,000 of tax payable, which is Rs 18,000. That's the amount you can claim in a refund application. Our inverted duty refund guide walks through the filing.
Returnable bottles. Many goli soda makers collect a deposit on crates and bottles. Under the proviso to Section 2(31) of the CGST Act, a deposit isn't payment for a supply unless the supplier applies it as consideration. Keep deposits in a separate ledger. If a shop never returns a crate and you keep the deposit in place of the bottles, that amount has become consideration and needs GST.
Registration and the composition bar
When to register. If you only sell goods, Notification 10/2019-Central Tax lets you wait until aggregate turnover crosses Rs 40 lakh in a financial year. That higher limit doesn't cover intra-State suppliers in Telangana and a few other States, where the Section 22(1) limit of Rs 20 lakh applies. Our registration limit guide has the State-wise picture, and our GST registration service files the application. In practice most bottlers register early anyway, because distributors and supermarkets want a tax invoice.
Composition is closed to aerated water makers. Section 10(2)(e) of the CGST Act bars manufacturers of goods notified by the Government. Notification 14/2019-Central Tax lists ice cream, pan masala and tobacco, and Notification 43/2019-Central Tax added S. No. 2A, "Aerated Water" (tariff item 2202 10 10), from 1 October 2019. If you make goli soda or any other sweetened or flavoured aerated water, you must stay on the regular scheme.
Juice and plain soda makers can opt in. If last year's aggregate turnover was up to Rs 1.5 crore (Rs 75 lakh in the States named in Notification 14/2019), a manufacturer pays 0.5% CGST plus 0.5% SGST, so 1% of turnover, under Rule 7 of the CGST Rules. You issue a bill of supply, charge no GST and claim no credit. On a 5% product with 18% packaging, compare the two routes on your real numbers: on the regular scheme a refund may cover part of the extra credit, while on composition you lose all of it. If you run both a soda line and a juice line, composition is off the table for the whole registration.
Step-by-Step Guide
Setting Up GST for a Soda or Juice Unit
List every product with its recipe
Note whether each drink has gas, sugar, flavour, fruit juice, milk or caffeine. These decide the HSN code and whether it's 5% or 40%.
Map each product to its notification entry
2202 10 sweetened or flavoured drinks, carbonated fruit drinks and caffeinated drinks at 40%; 2201 plain soda, 2009 juice, non-carbonated fruit drinks and milk drinks at 5%. Use the 2202 99 codes in force from 1 May 2026.
Decide regular scheme or composition
Any aerated water line means regular scheme only. A juice-only or plain soda unit with turnover up to Rs 1.5 crore can compare 1% composition with the regular scheme.
Set up billing
Remove any old compensation cess line, show the HSN code on each invoice and keep bottle deposits in a separate ledger.
Track credit and refunds
Claim credit only after inputs appear in GSTR-2B. If a juice line builds up credit, prepare the Section 54(3) refund using the Rule 89(5) formula.
Source: Notifications 9/2025 and 1/2026-CT(R), 14/2019 and 43/2019-CT; CGST Act Sections 2(31), 10, 22 and 54; CGST Rules 7 and 89
Income tax: 44AD, cash from distributors and cash you pay
Section 44AD. For FY 2025-26, a resident individual, HUF or partnership firm (not an LLP) can declare 6% of turnover received by bank transfer, UPI or account payee cheque (by the return due date) and 8% of the rest as profit under Section 44AD of the Income-tax Act 1961. The limit is Rs 2 crore of turnover, or Rs 3 crore if cash receipts are within 5% of turnover. From 1 April 2026 the same scheme is Section 58(2), Table Sl. No. 1, of the Income-tax Act 2025, with the same rates and limits.
Example: a proprietor's juice and soda unit has turnover of Rs 80,00,000 in FY 2025-26: Rs 70,00,000 by bank and UPI and Rs 10,00,000 in cash from small shops. Cash is 12.5% of turnover, above 5%, so the limit is Rs 2 crore, and Rs 80 lakh is within it. Deemed profit is 6% of Rs 70,00,000 (Rs 4,20,000) plus 8% of Rs 10,00,000 (Rs 80,000), so Rs 5,00,000. Bottling plants carry machinery: depreciation on plant and machinery is 15% of written-down value under New Appendix I of the Income-tax Rules 1962, so a Rs 20 lakh filling line gives Rs 3 lakh of depreciation in a full year. Add bottle breakage, power and seasonal slack months, and your books may show less profit than 44AD. Check both with your CA, and read our Section 44AD guide on the five-year lock-in before you opt out. If you stay on 44AD, advance tax is a single payment by 15 March (Section 408(2) of the 2025 Act for FY 2026-27).
Cash you receive. Under Section 269ST of the 1961 Act (Section 186 of the 2025 Act), you can't receive Rs 2,00,000 or more in cash from one person in a day, for a single transaction, or for one event. A distributor picking up a summer load of 1,000 crates can easily cross that. The penalty is equal to the amount received (Section 271DA of the 1961 Act; Section 451 of the 2025 Act). Ask for UPI or a bank transfer on larger orders.
Cash you pay. If you keep books, a payment above Rs 10,000 in cash to one person in a day isn't allowed as a deduction (Section 40A(3) of the 1961 Act; Section 36(4) of the 2025 Act). Paying a bottle supplier Rs 30,000 in cash for one lot means the whole Rs 30,000 is disallowed. Our cash transaction limits guide covers both sides.
Common mistakes soda and juice makers make
- Billing goli soda at 5% because it's "just soda". Sugar or flavour moves it to 2202 10 at 40%. Only unflavoured, unsweetened soda water is 5%.
- Adding gas to a fruit drink without re-checking the rate. A carbonated fruit drink is 40%, not 5%.
- Still charging compensation cess. The 12% cess on 2202 10 drinks is nil from 22 September 2025.
- Opting for composition while making aerated water. Notification 43/2019-CT bars it, even if you also make juice.
- Putting rent or machinery GST into the juice refund. Rule 89(5) Net ITC counts inputs only.
- Mixing bottle deposits with sales. A deposit isn't taxable until you keep it in place of the bottles.
- Taking Rs 2 lakh or more in cash from a distributor for one order. The penalty equals the cash received.
How Tax Garden helps soda and juice makers
We start with your product list and recipes, because gas, sugar, flavour and fruit content decide whether a bottle is 5% or 40%. We register you, map each product to its notification entry and the 2202 99 codes in force from 1 May 2026, file GSTR-1 and GSTR-3B through our GST return filing service, and prepare inverted duty refund claims for juice lines. At year end we test 44AD against your books and machinery depreciation and file your ITR through our ITR filing service. Call or WhatsApp us on 9640290977.
Related reading: GST and income tax for packaged drinking water plants (many soda units also fill water jars), GST and income tax for ice cream makers, GST and income tax for FMCG distributors, the item-wise GST rates list and our composition scheme guide.
