Centre for Goods and Services Tax on alcohol, petro goods

The Central Government has favoured keeping alcohol and petroleum products under the purview of Goods and Services Tax (GST), rejecting a recommendation made by the Empowered Committee of State Finance Ministers.

The empowered committee had favoured keeping alcoholic beverages and petroleum products outside the purview of GST. 

However, the finance ministry said in its comments on the discussion paper prepared by the empowered committee on GST,
“Alcoholic beverages should be brought under the purview of GST to remove the cascading effect on GST paid on inputs such as raw material and packaging material.”

Value Added Tax (VAT) and state excise duty can be charged on alcoholic products over and above GST, the ministry said.

On GST on petrol, diesel and aviation turbine fuel, the ministry said keeping them out of the purview would make it very difficult for refineries to apportion the credit on capital goods, inputs services and inputs. GST must be levied on these products but in select cases of GST, credit can be disallowed to minimise misuse, the ministry said.

However, the Ministry agreed with the committee to subject tobacco products to GST with input tax credit. The Centre can levy excise duty on tobacco products over and above GST without input tax credit. The ministry also agreed to the committee’s  dual GST Structure—state GST and central GST plan.

On state GST, the ministry said electricity duty, octroi and
purchases tax levied by local bodies also should be subsumed. NW18