GST– Will GST be imposed on liquor as well, will beer become expensive? Let’s find out

GST– Will GST be imposed on liquor as well… This question must have come to everyone’s mind at some point or the other. After all, when clothes, vehicles, mobiles, food items have all come under the ambit of GST, then why not liquor and petrol-diesel… Finance Minister Nirmala Sitharaman herself answered this question.

Why no GST on liquor and petrol?

Nirmala Sitharaman said that the decision to bring liquor under the ambit of GST is completely in the hands of the states. She clarified that the central government cannot say anything on this. Liquor is currently outside the GST and it is the biggest source of income for the states. This is why it is the right of the states to impose or not impose tax on liquor. Currently, taxes like excise duty and VAT are levied on liquor and petroleum products, which go directly to the states.

Big changes in GST rates

Meanwhile, the GST Council has recently approved the biggest reform since 2017. Now GST rates have been reduced to just two. One is the standard rate of 18% and the other is the merit rate of 5%. Apart from this, a demerit tax of 40% will also be imposed on special products.

This 40% tax is not on alcohol, but it will definitely be imposed on sin goods like cigarettes, gutkha, tobacco, zarda and some super luxury products. Apart from this, cold drinks, caffeinated drinks and some fruit drinks have also been included in this list. The Finance Minister also said that preparations for these reforms were going on for the last one and a half years and the tariff imposed by America has nothing to do with it.

It is clear from this that bringing liquor under GST will depend on the will of the states. At present, there is little possibility of this step being taken soon.