Most of our posts on packaged drinking water (PDW) deal with FSSAI, BIS, CGWA and the pollution board. GST gets less attention, yet it touches every invoice a plant raises. More than a year after the GST rate rationalisation, we still meet plant owners whose billing software, price lists or distributor invoices carry the old rates. This guide sets out the current position with official sources.
What changed, and when
The 56th GST Council meeting on 3 September 2025 recommended a new rate structure. According to the Government's press release (PIB, 3 September 2025), the new rates for these goods applied from 22 September 2025. For water, the two changes that matter are:
- Drinking water packed in 20-litre bottles: 12% to 5%.
- Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening matter or flavour (heading 2201, which covers PDW in ordinary bottles): 18% to 5%.
The same release moved aerated and other waters with added sugar or flavouring (2202 10) from 28% to 40%. So the line between "plain water" and "flavoured water" now carries a much bigger tax difference than before.
| Item (as described in the PIB release) | HS code | Rate before 22 Sep 2025 | Rate from 22 Sep 2025 |
|---|---|---|---|
| Drinking water packed in 20-litre bottles | 2201 | 12% | 5% |
| Mineral, artificial or aerated waters, not containing added sugar, sweetening matter or flavour | 2201 | 18% | 5% |
| Aerated and other waters with added sugar or flavouring | 2202 10 | 28% | 40% |
Source: PIB release on the 56th GST Council recommendations, 3 September 2025. Always confirm the current entry in the CBIC rate notification before invoicing.
How the cut showed up in prices
One public example: the Ministry of Railways revised prices of packaged drinking water sold on trains and railway premises with effect from 22 September 2025. As reported by News On AIR on 20 September 2025, Rail Neer and other one-litre bottles sold there went from Rs 15 to Rs 14, and 500 ml bottles from Rs 10 to Rs 9. Prices elsewhere depend on each brand's own MRP decisions, which vary by region, so check the pack.
Classification: when is water still "water"?
The 5% rate depends on the product staying within heading 2201. A recent advance ruling shows how this is tested. On 8 May 2026 the Gujarat Authority for Advance Ruling (In re Oxyhydra Beverages Pvt. Ltd., GUJ/GAAR/R/2026/16) examined a "black mineral water" containing calcium, magnesium and sodium, with no added sugar, flavour, sweetener or preservative. It held the product falls under HSN 2201 10 10 and attracts 5% GST, citing Entry 146 of Schedule I of Notification No. 09/2025-Central Tax (Rate) dated 17 September 2025 (reported by LiveLaw on 28 May 2026).
Two points for plant owners. First, the authority relied on laboratory reports and the manufacturing flow chart, so composition records matter. Second, an advance ruling binds only the applicant and its jurisdictional officers; it shows the reasoning but is not a general clarification.
What this means for water plant owners
- Check your HSN and rate master. PDW in bottles, PDW in 20-litre jars and plain mineral water should all be billed at 5% under 2201. Old 12% or 18% entries left in the software lead to wrong returns and customer disputes.
- Keep flavoured products separate. If you add flavour or sweetener to any variant, it moves to 2202 and a 40% rate. Keep product specifications, label declarations and invoices consistent with each other.
- Watch input tax credit. With output at 5%, some inputs (packaging, machinery, services) may carry a higher rate, and credit can build up. The GST Council said a 90% provisional refund system for inverted duty structure cases would be introduced. Ask your chartered accountant whether a refund claim suits your plant.
- Align MRP and labels. MRP printed on the pack is inclusive of all taxes. Any revision must follow Legal Metrology rules; see our Legal Metrology packer registration guide.
- Lower tax, same licences. The rate cut does not change FSSAI high-risk inspections, the monthly testing scheme, CGWA groundwater rules or pollution board consents. See our approval checklist for a PDW plant and the BIS and high-risk category explainer.
How ClearPath Compliance India can help
We handle the licences and approvals a packaged drinking water plant needs: FSSAI licence, CGWA NOC, Pollution Control Board CTE/CTO, factory licence and fire NOC. We can also help you line up product specifications and label details with your licence records, and we work alongside your chartered accountant, who should advise on GST returns and refunds. Call +91 92521 92607 or message us on WhatsApp.
General information only, not tax or legal advice. GST rates, prices and rules are stated as reported by the named sources on the dates given and may change; confirm with the latest CBIC notifications and a qualified tax adviser. Brand names are trademarks of their owners and are used for identification only. This article is not sponsored or endorsed by any brand named.
Sources: PIB, 3 September 2025; News On AIR, 20 September 2025; LiveLaw, 28 May 2026; TaxGuru, 14 May 2026.