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December 30, 2022
By
Shreeja Ray

Taxation of Liquor and Related Products

Governments all over the world impose taxes on alcohol and related goods. Additionally, they manage and control sales. Consumers frequently end up paying four or five times as much as the price at a distillery due to local licensing fees and various state controls on the trade of alcohol. In this article, we'll quickly go over:

When it comes to taxing and regulating alcohol, India's 29 states and seven union territories have chosen various strategies. For instance, since 1961, the state of Gujarat has completely outlawed the sale and consumption of alcohol. Puducherry, a region on the Coromandel Coast, makes the majority of its money from the sale of alcohol. While some states have their own monopolies, others hold retail and wholesale license auctions. One state with a monopoly on the alcohol industry is Tamil Nadu, which has over 6,000 outlets and employs over 30,000 people.

What are the effects of charging GST on alcohol?

Some of the results are listed below:

1. The Central government doesn't put a tax on liquor that is meant to be drunk. The same is taxed by a state government. The different people who make liquor say that these taxes cut their profits by a lot.

2. In India, there is no GST on alcohol, but raw materials and other costs are taxed. Barley, denatured alcohol, molasses, and glass bottles are some of these. The tax rate on these things ranges from 18% to 28%. It has an effect on the people who make liquor because they have to pay the taxes. Again, if the producers raise the prices, it will likely hurt their sales and turnover. Before the GST Act, there was a 15% service tax on transportation costs and freight. Since the GST Act, this has gone up by 3% more. So, there haven't been any big changes to the VAT, but the prices of these types of drinks have gone up.

3. Most people who make alcohol are worried about their profits going down. It happens when there are too many low-quality brands on the market. It gets people who don't want to buy expensive, high-quality brands.

4. State governments are still taking the biggest hit from falling profits.

5. When people can't afford good liquor, they try cheaper brands, which could hurt their health in a big way.

FAQs

Which Indian state has the lowest alcohol tax rate?

The least amount of tax is put on liquor in the state of Goa. It has led to a huge increase in tourism, which has brought in a lot of money for the state.

Which Indian state has the highest sales tax on liquor?

The highest sales tax on alcohol is in the state of Kerala.

Which Indian states make the most money from the alcohol trade?

The sale of alcohol brings in a lot of money for the UT of Puducherry. A lot of money is also made from the sale of alcohol in Kerala and Tamil Nadu.

In India, does GST apply to beer as a drink?

There is no GST on beer or any other alcohol that is meant to be drunk.

How much is the GST on alcohol?

Alcohol that isn't meant to be drunk but is used in industry is taxed at 18% GST.

How much GST does Whisky cost?

Whisky has a 28% GST rate.

Conclusion

The alcohol industry opposes the Central Government's GST exemption for liquor. The additional taxes on liquor-making materials are the main reason, as this article explains. It takes a long time to get a collective input tax credit refund, which extends the working capital cycle. Beer producers say GST should be applied because India's growing tourist industry will generate more revenue. All liquor manufacturers believe GST will standardize prices nationwide. The liquor industry will profit most. Since liquor generates huge revenues, each state views this differently.

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