Budget 2024 impact: Will liquor prices fall as Extra Neutral Alcohol to be out of GST's purview?
The Budget 2024 made changes to the central GST law, specifically section 9. The changes remove Extra Neutral Alcohol (ENA) from the scope of the central GST law. This type of alcohol is used in making alcoholic beverages. The Finance Minister also suggested similar changes to the IGST Act and UTGST Act. Extra-neutral alcohol (ENA) is important in the production of alcohol for human consumption.
There was a problem which existed before this amendment in the Budget 2024. Though GST was being levied on ENA by some suppliers' liquor, which was the finished product, was not attracting GST. "This was leading to increased cost of production as the raw material cost (ENA) was being higher as GST was charged on it. Now, as the Central Government has decided to do away with the tax on ENA, it is up to the states to tax this raw material now which states may not levy at the same rate," says Advocate Apoorv Phillips, Senior Associate, Sirmacs Consultancy Services (Law Firm).
Price of liquor increases or decreases due to this?
"With this amendment, it is expected that the cost of production of liquor will come down which may mean a decrease in the cost of liquor. However, this may vary from state to state," says Advocate Arun Jain.
