Extra neutral alcohol for human consumption out of GST net

In its 52nd meeting, the GST Council has decided to keep extra neutral alcohol for human consumption out of the GST net, which can come across as a relief to the Indian alco-beverages industry. Following the decision of the federal indirect tax body, ENA will be governed by a 2 percent central sales tax (CST) on inter-state sales, rather than the 18 percent integrated GST (IGST).

"The GST Council's decision is a big relief to the industry, it will bring stability and settle nerves all over,” said Vinod Giri, Director General of CIABC. The GST Council's decision to reduce the GST on molasses from 28 percent to 5 percent was also praised by CIABC.

Talking on this matter, Suresh Menon, Secretary-General of the International Spirits and Wines Association of India (ISWAI), viewed that the decision by the GST Council to cede taxing control on un-denatured ethyl alcohol (ENA) for human consumption to the states was a major and very welcome step for the industry.

“The possibility of an increase in taxes and hence the possibility of an increase in the cost of this essential ingredient in the manufacture of alcoholic spirits if ENA were to be taxed to GST, thereby pushing up the prices of the end alcoholic beverage, now falls away, and is very welcome,” he added further.