GST Update: Revised HSN Classifications and Tax Rates for Beverages (Effective May 2026)

The Ministry of Finance has issued Notification No. 01/2026-Integrated Tax (Rate) and 01/2026-Central Tax (Rate), dated 30 April 2026, overhauling the GST classification framework for non-alcoholic beverages. Effective from 1 May 2026, this update aligns the GST tariff schedules with the revised Customs Tariff classifications introduced via the Finance Act, 2026.

What Has Changed?

This notification does not introduce brand-new tax structures but instead reclassifies specific beverages under the 5% and 40% GST slabs using updated 8-digit HSN codes under Chapter 22 (Heading 2202). Notably, the previous structure of 28% GST plus 12% Compensation Cess for aerated and sweetened drinks is now consolidated directly into a flat 40% GST slab, allowing for much simpler compliance.

Breakdown of New HSN Classifications

Schedule I (5% GST Slab)

These everyday items fall under the lower tax bracket:

• Fruit Pulp and Juice-Based Drinks: Non-carbonated fruit drinks (excluding pure juices under HSN 2009) are now clearly classified under HSN 2202 99 21 and 2202 99 29.
  
  

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• Milk-Based Beverages: Drinks containing milk, including plant-based alternatives like soya milk, fall securely under HSN 2202 99 31 and 2202 99 39.
  
  

Schedule III (40% GST Slab)

This higher bracket covers items traditionally viewed as non-essential:

• Caffeinated and Energy Drinks: These are specifically mapped to HSN 2202 99 91 and 2202 99 99.
  
  

• Other Non-Alcoholic Beverages: Aerated drinks and sodas are covered here. Importantly, as per a recent corrigendum dated 6 May 2026, the CBIC corrected an initial drafting error by replacing HSN 2202 99 90 with 2202 91 00 (Non-alcoholic beer) across all relevant rate notifications.
  
  

Actionable Steps for Businesses

If you are a manufacturer, importer, or FMCG distributor dealing in beverages, these changes have an immediate impact on your daily operations:

• Update Systems Immediately: You must configure your billing software, ERP, and inventory management systems to reflect the new 8-digit HSN codes.
  
  

• Ensure Compliance: Using outdated or incorrect HSN codes from 1 May 2026 onwards can trigger GST notices, heavy interest penalties, and Input Tax Credit (ITC) disputes with buyers.
  
  

As tax authorities prioritize strict adherence to 8-digit HSN reporting, accurate product classification is non-negotiable.

For expert guidance on this topic, contact your tax professional today.