Budget 2024 brew: Alcobev players pitch for uniform tax, excise duty cuts; ENA price relief, input tax credit hold key

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₹5,000 crore giant with 15-20% growth potential, needs a clearer regulatory framework to flourish," Tushar Bhandari, Whole Time Director, AABL, opined. Also Read | Alco-bev industry in tight spot over shrinking margins as states keep MRP constant: ISWAI's Nita Kapoor The alcobev industry currently faces a challenge where it pays Goods and Services Tax (GST) on the procurement of raw materials, packing materials, and services.

However, as there is no GST on the final product, which is liquor, the industry is unable to avail of the benefit of the input tax credit (ITC) for the taxes already paid during the purchase of raw materials and packing materials from suppliers. This results in a situation where the industry is unable to offset the GST paid on inputs against the tax liability on the final product, affecting its ability to claim tax credits and potentially impacting overall costs.

“Even on the export of liquor, the industry is not getting the benefit of GST paid on raw material/packing material, and due to this, we can’t offer competitive rates in comparison to other countries’ suppliers. This is adversely impacting the export revenue of the industry as well as the country," said Nakul Sethi, Director, Finance & Strategy of SOM Group of Companies.

Though the taxability of alcoholic beverages is mostly under states’ jurisdiction, the Union budget is relevant for matters related to GST. These arise due to the unique tax anomaly with the alcobev sector – while the final product is outside GST, most of the input costs are under GST, and there is no set-off mechanism, said Vinod Giri, Director General of Confederation of Indian Alcoholic Beverage Companies (CIABC).