Instant coffee to be cheaper as GST reduced from 18% to 5%

The coffee community has unanimously welcomed the GST Council’s decision and termed the move a ‘progressive step‘ to directly benefit consumers and the industry alike.

| Photo Credit: AlexRaths

The morning cuppa is going to be cheaper and more affordable thanks to the Union Government’s decision to reduce the GST on instant coffee from 18% to 5%. The new tax regime will come into effect from September 22.The coffee community has unanimously welcomed the GST Council’s decision and termed the move a “progressive step.”Rajat Agarwal, CEO, Barista Coffee told The Hindu, “Considering we still as an industry are not eligible for GST input credit, this will reduce the sourcing cost. Further, more money with consumers will boost spending at large, which should benefit retail.”Rana George, MD of Bengaluru-based Kelachandra Coffee that owns close to 6,500 acres of coffee plantations in Chikkamagaluru and Wayanad, said the government’s decision to reduce GST will significantly uplift the Indian coffee industry. “From farm to cup, a positive impact will be felt across the industry.”According to Mr. George, this will make coffee more affordable and accessible, thereby accelerate domestic consumption and open new avenues for market growth. “It will create a fairer playing field for growers, processors, and retailers, ensuring benefits across the entire coffee value chain,” she said,Mr. George also said, “Any relief in taxation would stimulate demand for coffee in the domestic market, encourage innovation and strengthen India’s standing in the global specialty coffee markets.”Harpreet Singh, Partner, Indirect Tax - Deloitte India, pointed out that coffee-related products, such as roasted chicory, coffee substitutes, and coffee concentrates, have now been moved to the 5% GST slab. “While this change is expected to benefit consumers through lower retail prices, it poses a short-term challenge for retailers holding inventory purchased at higher tax rates.”Praveen Jaipuriar, CEO, CCL Products (Continental Coffee), said, “This decision would positively impact both household sentiment and overall economic momentum.”Srikanth Rao, Director, Bayars Coffee, said, “Currently, instant coffee is taxed at 18%. With the new taxation bringing this down to 5% means consumers will be able to buy instant coffees and instant coffee liquids for a much affordable price.”Vikram Khurana, CEO, Kaapi Solutions that focuses on coffee machines and barista training, said, that for cafés, roasters, and retailers, this reduction eases financial pressures, enabling them to reinvest in quality, innovation, and customer experience.EoM Published - September 04, 2025 04:45 pm IST