Whether Tax on Extra Neutral Alcohol (ENA) Still Continue—Adyasha Mohanty

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The Tax Publishers GST--Tax on Extra Neutral Alcohol Whether Tax on Extra Neutral Alcohol (ENA) Still Continue Adyasha Mohanty The learned author seeks to analyse the implication of the amendment made by the Finance (No. 2) Act, 2024 excluding un-denatured extra neutral alcohol or rectified spirit used for manufacture of alcoholic liquor, for human consumption from the purview of levy of GST. 1. Introduction The GST Council, which is the top federal body for GST matters, first decided to exclude Extra Neutral Alcohol (ENA) and molasses from GST during its 52nd meeting on October 7, 2023. However, real progress came in during 53rd meeting on June 22, 2024, ultimately leading to their inclusion in the 2024-25 budget as a legislative mandate. Since the introduction of GST in India in July 2017, states lost the authority to levy taxes on ENA. However, ENA is an input for alco-beverage industry and is subject to levy of GST, though final output of alco-beverage is not subject to levy of GST but attracts state taxes. The union government has relinquished its right to tax ENA, choosing not to exercise this authority. Consequently, states may begin imposing Value Added Tax (VAT) on ENA, which could either be uniform across states or vary depending on the state. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

GST--Tax on Extra Neutral Alcohol

Whether Tax on Extra Neutral Alcohol (ENA) Still Continue

Adyasha Mohanty

The learned author seeks to analyse the implication of the amendment made by the Finance (No. 2) Act, 2024 excluding un-denatured extra neutral alcohol or rectified spirit used for manufacture of alcoholic liquor, for human consumption from the purview of levy of GST.

1. Introduction

The GST Council, which is the top federal body for GST matters, first decided to exclude Extra Neutral Alcohol (ENA) and molasses from GST during its 52nd meeting on October 7, 2023. However, real progress came in during 53rd meeting on June 22, 2024, ultimately leading to their inclusion in the 2024-25 budget as a legislative mandate.

Since the introduction of GST in India in July 2017, states lost the authority to levy taxes on ENA. However, ENA is an input for alco-beverage industry and is subject to levy of GST, though final output of alco-beverage is not subject to levy of GST but attracts state taxes. The union government has relinquished its right to tax ENA, choosing not to exercise this authority. Consequently, states may begin imposing Value Added Tax (VAT) on ENA, which could either be uniform across states or vary depending on the state.