GST Impacts Excise Revenue

With the apprehensions that Goods and Service Tax(GST) will have its impact on Excise Revenue, State Government is working out strategies to meet the exigencies.

Sources said that there will be a levy of around Rs.140 Crore of GST and it will eat away from the State Revenue collected from Excise sources.

So senior officials in the Department of Excise are worried over the impact of GST on Revenue being collected from Liquor Business, admits an official.

GST has been levied on all the Fees collected from different sources like IMFL, Beer, Country Liquor, Mahua, Bhang and other items.

Any fees collected will attract 18 Per cent of GST so according to estimates at least 27 Per cent of Excise Revenue will now attract GST.

According to break up of Revenue Collected in 2016-17, out of Rs.2929 Crore Rs.773 Crore collected as Fees will attract GST, which will be Rs.139.11 Crore.

Take for example, Retail License Fee, Bottling Fee, Pass Fee, application Fee, Manufacturing License Fee, Wholesale License Fee and Other Excise Fee will now attract GST.

There will be impact on entire supply chain of Excise products. And the retailer, the point of sale will impact the most and compliance will be additional.

In order to avoid such impact, Government of Telengana brought out major changes in the nomenclature of some of the terms like “Fees”.

And the Telengana Government promulgated an Ordinance to amend The Telengana Excise Act, 1968.

Accordingly all “Fees” were termed as “Tax”. This was done keeping in view that Union Government cannot impose any Tax on the Taxes already levied by the State.

So License Fees collected for Bars, Liquor Outlets and others are now termed as “Excise Tax” in Telengana to avoid GST.

Whether it will stand the Scrutiny of Law is another matter and Telengana Government is determined to continue with this stand.

So Odisha Government is studying the matter with all seriousness and will it follow the course of Telengana Government is to be seen, pointed out an Expert on GST.

While this course of action is looked into, another way to avoid impact of GST is also being discussed.

While Excise Duty does not attract GST, the officials are looking into that angle, whether to convert “Fees” into “Duty”.
However nothing concrete has come out of the several rounds of discussions.

Consultants are advising to Re-classify existing levies as Tax or Duty under Law.

Legal Experts are being also consulted and soon the Department of Excise will take a final call in the matter, said sources.

As Policy of Excise has already been announced from 1 April, changes if any will attract change in existing Excise Policy.

However, senior officials are working out various options to ease the impact of GST on Excise Revenue, which is targeted at Rs.3600 Crore to be collected during 2017-18.

Sources said that due to constant monitoring and supervision Excise Revenue collection target of Rs.720 Crore  in First Quarter of this Fiscal has already been achieved and officials are optimistic about achievement of target of Rs.900 Crore for the Second quarter.

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