GST Update: HSN Classification Changes for Beverages Under Notification No. 01/2026-IGST (Rate)

The Government has issued Notification No. 01/2026-Integrated Tax (Rate) dated 30 April 2026 to amend GST tariff classifications for beverages falling under HSN Heading 2202. The revised classification is effective from 1 May 2026 and aligns GST schedules with changes introduced under the Finance Act, 2026.

Key Changes Introduced

As per Notification No. 01/2026-IGST (Rate) and corresponding Notification No. 01/2026-Central Tax (Rate), the Government has revised certain HSN entries under Schedule I (5% GST) and Schedule III (40% GST).

The amendments primarily impact:

• Non-alcoholic beverages
• Fruit-based drinks and juice-based beverages
• Aerated and flavoured beverages
• Milk-based ready-to-drink products
• Sweetened or caffeinated beverages

Revised HSN Codes Under Schedule I (5%)

The following entries under Schedule I have been substituted:

• HSN 2202 99 21 and 2202 99 29
• HSN 2202 99 31 and 2202 99 39

These codes broadly relate to:

• Fruit pulp or fruit juice-based drinks (other than pure fruit juice)
• Beverages containing milk
• Certain ready-to-drink non-alcoholic beverages

The objective is to align GST classifications with the revised Customs Tariff structure under the Finance Act, 2026.

Changes Under Schedule III (40%)

Certain beverage categories attracting higher GST rates have also been revised under Schedule III.

The amended tariff entries include:

• HSN 2202 99 90
• HSN 2202 99 91
• HSN 2202 99 99

These entries generally cover:

• Aerated beverages
• Sweetened beverages
• Caffeinated drinks
• Other specified non-alcoholic beverages

Businesses should note that products falling under these classifications may also attract Compensation Cess in addition to GST, depending on the nature of the beverage.

Corrigendum Issued

A corrigendum issued subsequently clarified certain tariff references and corrected classification entries in the notification. One correction specifically substituted HSN “2202 99 90” with “2202 91 00” in the relevant schedule.

Impact on Businesses

Manufacturers, importers, distributors, and retailers dealing in beverages should immediately review:

• Product HSN mapping
• GST rate applicability
• ERP and invoicing systems
• Classification used in GST returns and e-invoices

Incorrect classification may lead to:

• GST demand notices
• Interest and penalties
• Input tax credit disputes
• Litigation regarding applicable tax rates

Businesses dealing in flavoured drinks, fruit-based beverages, sports drinks, dairy beverages, and carbonated products should conduct a detailed product-wise review to ensure compliance from 1 May 2026 onward.

Conclusion

The amendment introduced through Notification No. 01/2026-IGST (Rate) reflects the Government’s continued effort to synchronise GST schedules with revised tariff classifications under the Finance Act, 2026. Beverage manufacturers and traders should reassess their HSN classifications and applicable GST rates to avoid future compliance issues.

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