Makers want liquor under GST ambit

Liquor has been kept out of GST by states because it contributes over Rs 90,000 cr to state governments' revenue

Liquor companies have asked the select committee, reviewing the constitution amendment Bill on the goods and services tax (GST), to accord alcohol the same status as petroleum.

The Bill says petroleum can be brought under the GST should the proposed GST Council agree. There is no such scope for liquor, bringing it into the GST will need another constitutional amendment with two-thirds majority in Parliament and ratification by states.

Liquor has been kept out of GST by states because it contributes over Rs 90,000 crore to state governments' revenue.

"Inputs for the alcohol and beverages industry will be subject to GST. The output will be subject to state excise duty and sales tax. We will stand to lose in a major way," Sonjoy Mohanty of the International Spirits and Wines Association of India told Business Standard.

Mohanty said states' fears of losing revenue were unfounded as the new tax would increase economic activity in the long run. The industry does not want to lose the benefits of a common market and the economies of scale.

The 21-member select committee will meet industry representatives in Kolkata.

Some legislators said there should be no exclusions in the proposed tax. Rajya Sabha MP Rajeev Chandrasekhar said the constitution amendment Bill must be a holistic law allowing the GST Council to take a decision on all excluded items.

The Congress has demanded the Bill be reviewed by the select committee of the Rajya Sabha and not passed hurriedly as it was in the Lok Sabha.

The government has set a deadline of April 1, 2016, to introduce the GST.