New Delhi – In a pivotal move at the 52nd GST Council meeting, the Goods and Service Tax (GST) Council has granted an exemption for Extra Neutral Alcohol (ENA) used in the production of alcoholic beverages from the GST levy. This decision is set to provide a significant stimulus to the alcohol industry, which has faced taxation challenges.
ENA plays a vital role in the manufacturing of alcoholic drinks, and its tax treatment has long been a subject of contention. Prior to this decision, ENA used in liquor production was subject to an 18% GST rate, leading to increased production costs for the industry. With this exemption, the sector is poised for a much-needed boost.
The industry has welcomed this move, anticipating it will promote growth and competitiveness. Reduced production costs are expected to result in lower prices for alcoholic beverages, making them more accessible to consumers. This is likely to drive up sales and boost the revenue of alcohol manufacturers.
Furthermore, this decision aligns with the government’s “Make in India” initiative, which aims to encourage domestic production. By exempting ENA used in liquor production from GST, the government signals its commitment to supporting local manufacturing.
It’s worth noting that during the meeting, Himachal Pradesh’s Industry Minister, Harshwardhan Chauhan, advocated for an even broader exemption. He proposed that ENA used for industrial purposes should also be free from GST, a suggestion that garnered substantial support. Chauhan argued that such an exemption would simplify compliance procedures without significantly affecting revenue generation, thereby promoting a more business-friendly environment.
