GST Notification 01/2026-Central Tax (Rate) Effective May 1 2026: How the Finance Act 2026 Beverage Reclassification Moves HS 2202 Carbonated and Caffeinated Drinks to the 40 Per Cent Slab, the Schedule I and Schedule III Tariff Substitutions, the May 6 Corrigendum GSR 339(E), and the Practitioner Compliance Checklist
Quick Summary: Key Takeaways
- Notification No. 01/2026-Central Tax (Rate), dated 30 April 2026, amends Notification No. 09/2025-Central Tax (Rate) dated 17 September 2025 to align the GST tariff entries for certain beverages with the structural changes introduced by the Finance Act 2026.
- The changes are effective from 1 May 2026. They were issued under Sections 9(1) and 15(5) of the CGST Act 2017 on the recommendation of the GST Council.
- The amendment substitutes tariff entries under HS Code 2202 (non-alcoholic beverages). Schedule I (2.5% CGST, i.e. 5% combined) entries at serial numbers 150 and 151 are substituted, and Schedule III (20% CGST, i.e. 40% combined) entries at serial numbers 2 and 3 are substituted.
- The practical effect for affected products is a move into the 40% combined GST slab, the demerit-rate tier confirmed under the Finance Act 2026 GST rate structure, in place of a lower rate.
- A corrigendum dated 6 May 2026 (G.S.R. 339(E)) was issued to clarify tariff entry “2202 91 00”. Check the corrected entry before you finalise the classification of any beverage SKU.
If you advise beverage manufacturers, bottlers, distributors, or retailers, this is the GST change to read this week. Notification No. 01/2026-Central Tax (Rate) reclassifies a set of beverage tariff entries under HS Code 2202 and, for the affected products, moves them into the 40% combined GST slab from 1 May 2026. This advisory breaks down exactly what the notification changes, who is affected, and the compliance steps to take before your next return.
What Notification 01/2026-Central Tax (Rate) actually does
The notification is an amendment, not a fresh rate schedule. It edits the master rate notification (Notification No. 09/2025-Central Tax (Rate)) to substitute specific tariff lines so they read consistently with the Finance Act 2026 classification. The substitutions sit in two schedules.
| Schedule | CGST rate | Combined GST | Serial nos. | Tariff entries substituted (HS 2202) |
|---|---|---|---|---|
| Schedule I | 2.5% | 5% | 150, 151 | “2202 99 21, 2202 99 29” and “2202 99 31, 2202 99 39” |
| Schedule III | 20% | 40% | 2, 3 | “2202 91 00, 2202 99 91, 2202 99 99” |
HS Code 2202 covers waters (including mineral and aerated waters) containing added sugar, sweetener, or flavour, and other non-alcoholic beverages. The notification fine-tunes which sub-entries fall into the lower 5% tier and which fall into the 40% demerit tier. Because a Central Tax (Rate) notification states the CGST half of the rate, remember to read the figures as combined GST: 2.5% CGST is 5% combined, and 20% CGST is 40% combined once the matching SGST or UTGST is added.
The Finance Act 2026 rate-structure context
The amendment does not exist in isolation. It implements, at the tariff-line level, the rate structure set by the Finance Act 2026, which retains a 40% combined demerit slab for specified goods. Aerated, carbonated, and certain caffeinated or sweetened beverages have consistently been treated as demerit or sin goods under GST, so the substitution of these HS 2202 entries into Schedule III at 40% is a continuation of that policy, now expressed in the updated tariff language. The takeaway for classification is to map each beverage SKU to its precise eight-digit HS code and then to the correct schedule, rather than relying on a product-category label.
Who is affected and how
- Beverage manufacturers and bottlers: output GST on affected SKUs may move to the 40% slab. Update your billing masters, price lists, and ERP tax codes with effect from 1 May 2026.
- Distributors and stockists: verify the rate on transition stock and on fresh invoices. Mismatched rates on inward and outward invoices are a common source of input tax credit disputes.
- Retailers and quick-commerce sellers: shelf prices and point-of-sale tax configuration must reflect the revised rate. A wrong rate at the till is a refund and reconciliation headache.
- Tax and finance teams: reconcile the HSN-wise summary in GSTR-1 and the rate-wise liability in GSTR-3B to the new classification, and document the basis for each SKU’s schedule placement.
The 6 May 2026 corrigendum
A corrigendum dated 6 May 2026 (notified as G.S.R. 339(E)) was issued to clarify tariff entry “2202 91 00”. Corrigenda to rate notifications are easy to miss, but they are part of the operative text. Before you lock the classification of any SKU that touches 2202 91 00, read the corrigendum alongside the parent notification so you are working from the corrected entry rather than the original print.
Compliance checklist before your next GST return
- Identify affected SKUs by HS code. Pull every product mapped to HS 2202 and tag the eight-digit sub-entry for each.
- Re-map each SKU to the correct schedule. Place each sub-entry into Schedule I (5%) or Schedule III (40%) per the substituted entries, reading the corrigendum for 2202 91 00.
- Update ERP and billing tax codes with effect from 1 May 2026. Ensure invoices dated on or after 1 May 2026 carry the revised rate.
- Handle transition stock and pending invoices. Confirm the rate applicable by reference to the time of supply rules, not merely the dispatch date.
- Reconcile GSTR-1 and GSTR-3B. Match the HSN-wise outward summary and the rate-wise liability to the new classification for the May 2026 tax period.
- Protect input tax credit. Flag any inward invoices where a supplier has applied the wrong rate, and resolve before claiming credit.
- Document the classification basis. Keep a one-line note per SKU recording the HS code, the schedule, and the notification reference, so the position is defensible in any scrutiny.
Frequently Asked Questions
What is Notification 01/2026-Central Tax (Rate)?
It is a rate-amendment notification dated 30 April 2026, issued under Sections 9(1) and 15(5) of the CGST Act 2017 on the GST Council’s recommendation. It amends Notification No. 09/2025-Central Tax (Rate) to substitute certain HS 2202 beverage tariff entries, effective 1 May 2026.
From what date do the new rates apply?
From 1 May 2026. Invoices issued on or after that date for the affected SKUs should carry the revised rate, subject to the time of supply rules.
Which beverages move to the 40% slab?
The affected sub-entries under HS 2202 substituted into Schedule III (20% CGST, i.e. 40% combined) at serial numbers 2 and 3, namely 2202 91 00, 2202 99 91, and 2202 99 99. Map each SKU to its precise eight-digit code, and read the 6 May 2026 corrigendum for 2202 91 00, before concluding.
Why does the notification say 2.5% and 20% rather than 5% and 40%?
A Central Tax (Rate) notification states only the CGST component. The combined GST is double that figure once the matching SGST or UTGST is added, so 2.5% CGST is 5% combined and 20% CGST is 40% combined.
Is there anything else to read alongside the notification?
Yes. Read the corrigendum dated 6 May 2026 (G.S.R. 339(E)), which clarifies tariff entry 2202 91 00, and check it against the parent Notification 09/2025-Central Tax (Rate) so you are working from the corrected, consolidated text.
Disclaimer
This article is published by Tax Update India for general information and educational purposes only. It is not legal, tax, or professional advice. GST classification depends on the precise tariff entry, the product, and the facts of supply. Verify Notification No. 01/2026-Central Tax (Rate), its 6 May 2026 corrigendum, and the parent Notification No. 09/2025-Central Tax (Rate) against the primary source on the CBIC portal before acting, and consult a qualified professional for advice on your specific situation.
Get the beverage reclassification right the first time
If your business sells products under HS 2202 and you are unsure which SKUs move to the 40% slab from 1 May 2026, a wrong classification compounds across every invoice and every return. Talk to an Expert to review your SKU-to-HSN mapping, your ERP tax codes, and your GSTR-1 and GSTR-3B reconciliation so the transition is clean and defensible. For related coverage, see our GST tribunal practitioner advisories on the GSTAT Cohort-D final filing window and the mid-window practitioner status.
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