The Indian Government has slashed the Goods and Services Tax (GST) rate on instant coffee from 18 per cent to five per cent following a review at the 56th GST Council meeting chaired by Finance Minister Nirmala Sitharaman.
The new rate will take effect from 22 September 2025 and is part of a broader, sweeping reform to simplify India’s GST structure into three main sections, where a five per cent tax will be placed on essential and merit goods, well below the standard rate of 18 per cent.
Finally, a 40 per cent rate will be added for non-merit goods like tobacco and carbonated beverages which, under the reforms, have been labelled as ‘super luxury’ and ‘sin’ goods.
Kelachandra Coffee one of India’s largest privately held coffee plantations. Managing Director Rana George has welcomed the tax reform and believes it will significantly boost India’s coffee sector.
“We welcome the government’s decision to reduce GST on coffee from 18 per cent to five per cent, a progressive step that will significantly uplift the Indian coffee industry,” says George.
“By making coffee more affordable and accessible, this move will accelerate domestic consumption and open new avenues for market growth. It creates a fairer playing field for growers, processors, and retailers, ensuring benefits across the entire value chain.
“At a time when India is not only one of the world’s largest producers but also emerging as a vibrant consumer market, this decision will stimulate demand, encourage innovation, and strengthen our global standing in specialty coffee.”
The move has come after Prime Minister Narendra Modhi promised to lower India’s GST by October in response to the up to 50 per cent tariffs placed on Indian goods by the United States.
“The wide-ranging reforms will improve the lives of our citizens and ensure ease of doing business for all, especially small traders and businesses,” says Modhi.
