GST Exclusion for ENA in Alcoholic Beverages: Key Developments
By: Admin
October 10, 2024
Categories: GST Recent News
4 Min Read
The taxation of Extra Neutral Alcohol (ENA), a vital component in the production of alcoholic beverages, has long been a contentious issue between India’s central and state governments. While states hold the authority to tax alcoholic liquor for human consumption, ambiguity surrounding the applicability of GST on ENA led to a dual taxation issue, involving both GST and state VAT.
Recent resolutions, including recommendations from the 52nd and 53rd GST Council meetings and the Finance (No. 2) Bill, 2024, have provided much-needed clarity. Beginning November 1, 2024, ENA used in the manufacture of alcoholic liquor for human consumption will be explicitly excluded from the GST regime. This move aims to address confusion regarding dual taxation and reduce the financial burden on the alcoholic beverages industry.
Key Points:
GST will not apply to undenatured ENA or rectified spirit used in the production of alcoholic liquor for human consumption.
States will retain exclusive authority to tax alcoholic beverages and related materials, including ENA.
This change, effective November 1, 2024, is expected to eliminate input tax credit issues and reduce costs for the liquor industry.
These measures are a welcome relief for the liquor industry, as they simplify the tax structure and ensure that ENA used for human consumption remains under state taxation.
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