Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 22-8-2018 – During FY 2017-18, the industry witnessed highway sales bans, demonetization, GST, route-to-market changes in UP, West Bengal and Chhattisgarh. The alcoholic beverages industry in India is heavily regulated, with excise and other taxes forming an important source of revenue for state governments. The rumors or expectations of inclusions and exclusions from Goods and Services Tax (GST) net have its toll on stock market prices of liquor manufacturing companies. And it work both ways to raise or lower the stock market prices of these companies. This was witnessed recently in stock market behavior of alco-beverages companies. The spirits industry is heavily regulated
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ant for human consumption with 90 percent usage. An inclusion of ENA in GST would mean that profitability of all alco-beverages companies would take a hit. The overhang of possible inclusion of extra neutral alcohol within the ambit of the goods and services tax (GST) remains, and the potential impact from this could knock off 10% to 15% from EBITDA (operating profit before tax). However, while centre is keen to impose this levy, many states are opposed to it as they feel that to tax it is their right. Currently, states levy VAT on ENA. ENA is a derivative of sugarcane molasses and used in a number of industries, from cosmetics to alcoholic beverages. Almost 80 per cent of it is used in making potable alcohol. The rest is used by the pharma
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s it impact share prices can be understood from stock market trends. For example, the share price of United Spirits declined upto 4 percent 2-3 days before GST Council meeting on speculation that Extra Neutral Alcohol may be brought under the GST ambit which will adversely impact profitability of alco- beverages segment. Going further, the prices witnessed a decline of upto 15 percent in one month prior to July meeting of GST Council. Same could be seen for Radico Khaitan Ltd., another major player and others. Recently, a company sought Advance Ruling on this issue but the Authority for Advance Ruling declined to issue any ruling or opinion stating that GST Council should first decide on the levy of GST on ENA. The Centre had sought the Att
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