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Alcohol is one of the few major commodities in India that does not fall under the Goods and Services Tax (GST) system. Unlike most goods and services, the gst on alcohol in india is non-existent. But why is alcohol excluded? What taxes apply instead? And how does this affect pricing, compliance, and revenue? In this blog, we’ll explain why gst on alcoholic beverages is outside the GST framework, and what tax structure applies instead.
No. As per Article 366(12A) of the Indian Constitution, alcohol for human consumption is kept out of GST. The power to tax alcoholic beverages is retained by individual state governments.
So, instead of GST, alcohol is subject to:
This makes gst on alcohol in india an exception within the indirect tax framework.
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Alcohol was excluded from GST to:
Instead of GST, alcohol is taxed as follows:
| Tax Component | Who Levies It? | Typical Rate |
|---|---|---|
| Excise Duty | State Government | Varies by state |
| VAT | State Government | 5% to 30%+ |
| License Fees | State Excise Department | Annual/Monthly |
| Cess/Additional Levy | Some States | Fixed or % based |
So, while there’s no gst on wine or liquor, the total tax burden can be over 60% of the selling price in many states.
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Although there’s no GST on alcoholic beverages, GST is applicable on:
However, Input Tax Credit (ITC) cannot be claimed on these services if they are used in the production or sale of alcohol for human consumption, as per Section 17(5) of the CGST Act.
| Item | GST Rate |
|---|---|
| Ethanol for industrial use | 18% |
| Denatured alcohol (not for drinking) | 18% |
| Alcoholic sanitisers | 18% |
| Wine (for exports, industrial use) | 18% – 28% |
This means while the alcohol gst rate in india is officially 0% for human consumption, other forms of alcohol are still taxable under GST.
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The gst on alcohol in india remains a special case—alcoholic beverages are outside the purview of GST and are instead governed by a mix of excise duties, VAT, and state levies. For businesses, this means a dual compliance burden, as GST applies to some parts of the supply chain (like bottling or packaging) but not the final product. While alcohol continues to generate substantial revenue for states, it stands apart from the one-nation-one-tax vision of GST.
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