Alcohol, tobacco kept out of the purview of GST

By NewsGram Staff Writer
After passing the Goods and Services Tax (GST) Bill 2014, the Lok Sabha has also approved an amendment to help all the states in the transition phase by charging an additional tax of 1 per cent on inter-state trade on goods.

After regular imposition of indirect taxes, like excise, service tax, VAT and sales tax, in different sectors by the central and state governments, the pan-India goods and services tax regime has planned to facilitate a common market in the country.

However, the taxes on all the highly consumable products like petroleum, alcohol for human consumption and tobacco have been kept out of the purview of GST.

Taxes collected on alcohol yields a major part of state revenues. Taking an example of Kerala, it contributes 22 per cent of revenue, while in Tamil Nadu, it gives about Rs. 21,000 crore per year.

Transport fuels, like petrol and diesel, are taxed at 20 per cent, whereas states receive 35 per cent of their sales tax revenues from them.