No GST for alcohol (alcoholic liquor for human consumption) in India – Why?

GST for alcohol???

You may all think why GST is applicable for sanitary napkins but not for alcoholic liquor for human consumption. Before knowing why GST is not applicable for alcoholic liquor for human consumption, Let’s take a small glimpse about GST.

Know something about GST.

Goods and services taxes are levied on the supply of goods or services. You may get a doubt. Is GST applicable to all the goods and all the services?. The answer is NO. GST is applicable for all goods and services only if it satisfies certain conditions given in the Act.

1. It should Qualify itself as a supply (Section 7(1) of CGST act,2017)

Examples

• Father giving his bike to his son on his birthday will not qualify as supply

• Doctor giving consultation to his family members without fees will not qualify as supply
• A lawyer handling the case of a person for personal issues without consideration will not come under the scope of supply

2. The respective goods or services should not be notified as exempted from GST as per the notification given by the Government.

Example

• Agriculture produce is exempted as per the notification by Government.

(That is it should be a taxable supply)

CONDITIONS TO QUALIFY AS A SUPPLY 

To sum up, in layman’s language,  section 7(1) of CGST, 2017 gives certain conditions to qualify something as a supply. Section 7(1) is further divided into 7(1)(a) , 7(1)(b) and 7(1)(c) . That is, it should come under any of the above three to qualify as a supply.

ALCOHOLIC LIQUOR FOR HUMAN CONSUMPTION- QUALIFIES THE CONDITIONS

The heading may confuse you but it’s the truth. Alcoholic liquor for human consumption may satisfy all the conditions to qualify as per section 7(1) but why there is no GST for alcoholic liquor for human consumption.

Because there is another section called section 9 of the CGST Act, 2017 which gives the power to the government to collect tax(GST) from the public. In section 9(1) the Act clearly says the government has no power to collect tax(GST) on alcoholic liquor for human consumption.

BUT why there is no GST for alcohol (alcoholic liquor) for human consumption?

Further to know why alcoholic liquor for human consumption is not under the scope of GST and why Govt. Was given no power to collect GST for alcoholic liquor for human consumption? Here is one of the major reasons behind this.

REASON 

If you see in social media many memes are coming against the government for excluding ALCOHOLIC LIQUOR FOR HUMAN consumption from the scope of GST.

Though it’s not under the scope of GST. Still, now Alcoholic liquor for human consumption is subject to tax under the previous act.

Like all of you, I have read about the tax rates for Alcoholic liquor for human consumption. I was shocked to see the percentage of tax. The tax rates is nearly200% – 300%.

No, I am not joking you can verify the facts for Tamil Nadu in the below link:

 https://www.tasmac.co.in/ed_vat.php

                    Likewise, every state has it’s own tax rates for alcoholic liquor for human consumption for which the entire tax portion will be paid to the respective state government. Whereas in case of goods or services under the GST half portion will be paid to central and a half to respective state government.

IN GST the government has categorized items in five major slabs – 0%, 5%, 12%, 18% and 28%. Where 28% is for sin goods and luxury Goods

Now let’s see what will happen if GST is imposed :

The maximum slab currently prescribed by the government in GST: 28%

The current rate for alcoholic liquor for human consumption: nearly 200%.( not the exact % )

The below table shows the impact of GST if it is imposed :

Particulars	Other taxes (current scenario) (In INR)	If GST imposed (In INR)
Cost	1000	1000
Other taxes @200%	2000	–
GST (CGST 14% + SGST 14%)	–	280
Final Price	3000	1280

Impacts

1. The revenue for the government will be reduced from 2000 to 280 for a product worth 1000. Imagine in crores you may get to know the real impacts.
2. The rate for which it is available for customers will drastically get reduced. Thereby more quantity will be purchased by the customer and more drunkards will be added to the society and it will give a negative impact on the life of more people. If the liquor rate is low the consumption will be high. Which is bad for society.

Because of the above reasons, it’s better not to get the GST imposed on alcoholic liquor for human consumption.

Note: Please don’t confuse GST for alcohol with GST on alcoholic liquor for human consumption. Alcohol is a broad term which includes alcohol liquor for human consumption which is specifically excluded from the scope of GST.

I think I have given a good example and reason for your questions on GST for alcohol(alcoholic liquor- human consumption). What I explained above is just one of the major reasons and there may be many reasons behind it.

It’s always easier to criticize but harder to analyze don’t believe in Rumor always stick on with facts.

We will discuss other facts and answers to your questions in my next article.

Thanks for reading.

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