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GST IMPACT ON LIQUOR INDUSTRY

Goods and Services Tax - GST - By: - Dr. Sanjiv Agarwal - Dated:- 15-7-2017 Last Replied Date:- 17-7-2017 - It is a fact that GST which has been introduced in India w.e.f. 01.07.2017 has kept out all forms of alcoholic beverages (e.g. beer, whiskey or wine) out of its ambit and as such anybody would believe that GST will not impact alco-beverages and that alco-beverages may enjoy neutrality so far as taxes are concerned. Simply put, taxes on liquor are going to be same in GST era, as they are at .....

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nd why this may not hold good. It may be noted that there is no GST on alcoholic liquor for human consumption but supply of these goods would be subject to existing State levies. Ethyl alcohol and other spirits, denatured, of any strength shall be liable to GST at the rate of 18 percent. 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 .....

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uts) and services which go into the manufacture of liquor may go up and become part of the cost. This shall invariably 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 takin .....

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marketing incentives etc. would be liable to levy of GST. Infact, all expenses other than salary cost will be liable to GST. Given the fact that most of services will now be taxed at standard rate of 18 percent, there will be a flat hike in tax rate by 3 percent across the board. The only respite could be some planning by way of review of business arrangements so that some activities may fall in the scope of services on which GST is levied as on services on which some input tax credit could be .....

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ded Tax (VAT) when sold. Thus, the industry would be subject to same taxation as was applicable prior to July 1, 2017. While this segment of economy continues to reel under existing taxes, they would also be subject to levy of GST on: All inputs which are covered under levy of GST, Input services which go into rendering of supply of goods or services in relation to alco-beverages, and Certain fees payable for licenses and permits to State Government or local bodies which do not form part of taxe .....

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areas of dispute between tax authorities and tax payers. For example, a hotel may offer a buffet dinner which includes food and complimentary beer / hard drink / aerated drinks for a common price of ₹ 2500 per person. The issue would be that how to tax the amount of 2500/-, i.e., whether GST is payable on entire 2500/- @ 18 percent (the rate which is applicable to restaurants / hotels) or it should be split between food, drinks and alco-beverages and taxed separately for GST and VAT. This .....

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