No GST on Alcohol, but Beer Will Still Be Costlier

India has a complex tax system, and the Goods and Services Tax (GST) is no exception. Recently, there has been a lot of discussion around the GST on alcohol, with some reports suggesting that there will be no GST on alcohol. However, as with most things in India, the situation is more complicated than that.

Firstly, it's important to understand that alcohol falls under the purview of state governments in India. This means that the state governments are responsible for setting the tax rates on alcohol. The central government has no control over these rates.

So, when it comes to the GST on alcohol, there is actually no GST on alcohol sold in bars and restaurants. However, there is still GST on alcohol sold in shops. This is because the GST only applies to goods and services that are sold for consumption outside of the premises. So, while you might not see GST on your restaurant bill, you will still pay GST on your beer from the corner shop.

But why is beer going to be costlier? Well, the reason for this is that the central government has increased the excise duty on beer. The excise duty is a tax that is levied on the production of goods, and the increase in this tax means that the cost of producing beer will go up. This cost will then be passed on to the consumer in the form of higher prices.

This increase in excise duty is part of the government's efforts to raise revenue. With the COVID-19 pandemic causing a significant drop in tax collections, the government has been looking for ways to increase revenue. Increasing the excise duty on beer is one of the ways in which the government is trying to do this.

So, what does this mean for small and medium business owners and startup founders in India? Well, for those who are in the alcohol industry, the increase in excise duty could mean higher costs and lower profits. For those who are not in the alcohol industry, it's unlikely to have any direct impact on their businesses.

However, it's worth remembering that the alcohol industry is a significant contributor to the Indian economy. According to a report by the Confederation of Indian Alcoholic Beverage Companies, the industry accounts for around 0.8% of India's GDP and employs around 2.5 million people. So, any changes to the tax regime for alcohol are likely to have wider implications.

In conclusion, while there is no GST on alcohol sold in bars and restaurants, there is still GST on alcohol sold in shops. The increase in excise duty on beer will make beer costlier, and this is part of the government's efforts to raise revenue. While this is unlikely to have a direct impact on most small and medium business owners and startup founders in India, it is worth noting the wider implications for the Indian economy.