Inclusion of liquor in GST: FinMin and Congress not on same page

While there are differing views over the exclusion of items in the Goods and Services Tax (GST), the International Spirits and Wine Association of India has taken the position that alcohol be brought within the ambit of the proposed law, without disturbing the current structure of taxes as well.

In a letter to Finance Minister Arun Jaitley, the association argued that this be done without subsuming any of the existing state taxes (excise duty and sales tax) that apply to it in GST. According to it, GST will be an additional tax. This is bound to raise prices of alcohol, which will translate to an increase in revenues from the sector.
 

Previously, Jaitley had taken the position that inclusion of alcohol in GST will lead to a reduction in taxes on alcohol and decrease in the prices of alcohol. ISWAI said bringing alcohol under GST will help stop tax evasion, as there will be a documentary audit trail. Both inputs and outputs of the industry will be monitored reducing the scope for evasion. This in turn will improve tax collections and reduce black money.

Meanwhile, a war of words erupted between the Congress and Jaitley over a blog on inclusion of alcohol in GST posted by Mani Shankar Aiyar. Jaitley asked the Congress to explain its position vis-à-vis party member Aiyar.

"He (Aiyar) believes that liquor should be brought within GST instead of leaving it to the taxing purview of the states so that it can be taxed at the constitutional limit of 18 per cent that the Congress party now proposes," Jaitley had said on his Facebook page.