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WHAT DOES IT MEAN FOR LIQUOR TO BE OUT OF GST

Goods and Services Tax - GST - By: - Dr. Sanjiv Agarwal - Dated:- 19-6-2017 - It is a fact that alco-beverage companies shall be out of Goods and Services Tax (GST) net as per Constitution of India since GST can not be levied on alcoholic beverages meant for human consumption (potable liquor). It would continue to be a State subject on which taxes would be levied only by the State Governments implying that their production will not be subject to GST and will continue to be taxed with State Excis .....

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are consumed in the course of production of alcoholic beverages will add to the cost of production and it will thus increase the cost. It will be a cost to company, unlike other goods. Whatever taxes they pay on inputs or input services will not be allowed to be set off from the tax on finished goods which they produce tax. Cascading of tax would add to cost, squeeze working capital and the finished product (liquor) will have a higher selling price or profit margins will shrink. This may also i .....

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of immovable property leasing of distillery- liable to GST Assignment of brands - liable to GST Other Services (e.g. selling & distribution) - liable to GST Being out of GST Being out of GST net means a lot to this industry in terms of economies. It is a double whammy for liquor business - one, most of the input costs goes up and two, you don't get any set off of the taxes that go into the production of liquor implying that there is going to be huge cascading effect which will eventuall .....

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variably happen as taxes would form part of cost. The only exception could be grain spirit and grapes on which GST may not apply. However, another major input, molasses has been placed in highest tax bracket of 28 percent. All other inputs like chemicals, colouring agents and other consumables will also suffer GST of 5-18 percent. Coming to services, almost all services, right from taking approvals and licenses from the Government to distribution in market would be liable to levy of GST. For exa .....

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