Alcoholic beverage industry hails GST Council decision on extra neutral alcohol

New Delhi, (UNI) Welcoming the GST Council’s decision to keep extra neutral alcohol (ENA) used for manufacture of alcoholic liquor for human consumption from the GST ambit, industry experts said that the decision has put to rest the conflicting positions by various authorities.

In its 52nd meeting held here on Saturday, the GST Council recommended to keep ENA used for manufacture of alcoholic liquor for human consumption outside GST.

ENA is nothing but high strength potable alcohol used as the primary ingredient for making alcoholic beverages after due dilution with water.

“We are very happy to see the GST Council give a definitive recommendation on the taxability of Extra Neutral Alcohol (ENA) used in making alcoholic beverages,” said Vinod Giri, Director General, Confederation of Indian Alcoholic Beverage Companies (CIABC).

“Ideally the industry would have liked all of alcohol including the finished product be under GST to bring parity in taxation across states. However, we know there are complexities involved in that but as long as alcoholic beverages are kept outside GST, putting ENA under GST and leaving the industry with a stranded cost would have made little sense, especially as companies do not have the freedom to pass on this tax in most states,” he further said.

Giri said that the GST Council’s decision is a big relief to the industry and it will bring stability and settle nerves all over.

Rajitha Boorugu, Partner, Indirect Tax, BDO India said that the Council’s decision to keep ENA used for manufacture of alcoholic liquor for human consumption outside GST resolves an important issue for the alcoholic beverage industry.

Boorugu said that multiple views were prevalent on this issue and a large number of disputes were ongoing with GST authorities and in some cases, with State VAT authorities as well.

“The industry would look forward to the amendments which are proposed to be made in the GST law to give effect to this announcement and will hope that the issue is resolved for the past periods as well,” the tax expert said.

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