Cup of Instant Coffee Gets Cheaper as GST Cut to 5%

he revised rates, which will come into effect from September 22, are expected to benefit both consumers and the industry.

Bengaluru: Coffee lovers across the country will soon be able to enjoy their daily cup at a lower cost, following the Union Government’s decision to slash the Goods and Services Tax (GST) on coffee from 18% to 5%. The revised rates, which will come into effect from September 22, are expected to benefit both consumers and the industry, according to a report in The Hindu.

Welcoming the decision, Rajat Agarwal, CEO of Barista Coffee, told The Hindu that the change was timely. “It’s a welcome move from the government to revisit the rates. 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,” he said.

Rana George, Managing Director of Bengaluru-based Kelachandra Coffee, which owns plantations in Chikkamagaluru and Wayanad, said the rate cut would positively impact the entire coffee value chain. “From farm to cup, a positive impact will be felt across the industry. This move will make coffee more affordable, accelerate domestic consumption, and open new avenues for growth,” she noted.

Tax experts also pointed out the practical implications of the decision. Harpreet Singh, Partner at Deloitte India, explained that coffee products such as roasted chicory and concentrates would also fall under the lower tax slab. While retailers may face short-term inventory challenges due to earlier higher tax purchases, Singh said the overall outcome would be “more affordable coffee and higher consumption.”

The festive season is expected to amplify the benefits. Praveen Jaipuriar, CEO of CCL Products (Continental Coffee), remarked that the reform was not just about lowering prices but about “fueling demand, supporting volumes, and strengthening confidence in the domestic market.”

Similarly, Srikanth Rao, Director of Bayars Coffee, stressed that filter coffee and instant coffee products would now become significantly cheaper for households.

Vikram Khurana, CEO of Kaapi Solutions, added that the decision would also strengthen India’s growing café culture. “This isn’t just a tax reform it’s a catalyst for nurturing India’s vibrant coffee culture,” he said.

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