Skip to main content

Tax on liquor production input: AAR puts ball in GST Council's court

By
The central government wants to impose the levy; many states are opposed - at least, to the Centre doing so Is it legally permissible to impose the goods and services tax (GST) on extra-neutral alcohol (ENA), an input in liquor making? No one is quite sure at the moment. For, alcohol for human consumption or potable alcohol is outside GST. While, industrial alcohol is within it.
The central government wants to impose the levy; many states are opposed – at least, to the Centre doing so. They see this as their own prerogative; – they currently levy value-added tax (VAT) and sales tax on ENA.There is, however, counter-pressure from businesses. The pharmaceutical industry, for one, has been demanding inclusion of ENA within GST – if this happens, they can get input tax credit.
Advance ruling in GST: Classification-related disputes top the list
One company, Madhucon Sugar and Power, went to the Authority on Advance Rulings (AAR), an official body which is empowered to render an opinion on the tax consequences of a transaction or a proposed one. The latter declined to issue any opinion, saying the GST Council (a Centre-states body) must first decide on the applicability to ENA. The issues, it noted, was already before the Council.The Centre had sought the attorney general’s view on the matter, who gave a go-ahead, saying it was not fit for human consumption. So bringing it under GST would not require a Constitutional amendment.
GST: A common man's view
“Suppliers of ENA are looking at colossal contingent liability on account of tax, interest, and penalty. In the event such liability matures, recipients of such supplies would be denied tax credit,” according to Rajat Mohan, partner at AMRG Associates.ENA is a derivative of sugarcane molasses and used in a number of industries, from cosmetics to alcoholic beverages. Almost 80 per cent of it is used in making potable alcohol. The rest is used by the pharma industry to manufacture cough syrups and by the cosmetics industry to make perfumes.
GST: A year of learning and attainment
States also argued that if ENA goes under GST, they would not be able to monitor production of alcohol in the state."Technically, only alcohol meant for human consumption is excluded from GST. Therefore, any other kind of alcohol used for industrial purpose or inputs for production of alcohol should be covered within its ambit. Hopefully, the GST council will discuss this issue shortly since it has been pending for some time now,” according to Pratik Jain, partner, PwC India
The Business Standard, New Delhi, 09th July 2018

Comments

Post a Comment

Popular posts from this blog

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By
  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm
Post a Comment
Read more

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep
Post a Comment
Read more

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

By
  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and
Post a Comment
Read more