GST Council Cuts Tax Rate On Molasses To 5%, Exempts Alcohol For Consumption From Levy: FinMin Nirmala Sitharaman

The Council decided that extra neutral alcohol (ENA) for industrial use will come under the ambit of the GST, while ENA (potable alcohol) for human consumption will be exempted from GST.

The Goods And Services Tax (GST) Council in it’s meeting on Saturday decided to decrease the tax slab for molasses. The Council decided that molasses will be now taxed under the GST slab of 5 per cent, down from the previous 28 per cent category, and further exempted alcohol for human consumption from the levy. 

Talking about the tax slab for molasses, the Union Finance Minister Nirmala Sitharaman said, “GST has been reduced from 28% to 5%. This will benefit sugarcane farmers we hope, and this will enable their dues to be cleared faster because more money will be left in the hands of the mills or whoever. The council and we all feel that it'll also lead to a reduction in the cost of manufacturing of cattle feed, which will be a major development.” Molasses is a by-product of sugarcane and is used as a raw material for alcohol production.

The Council also decided that extra neutral alcohol (ENA) for industrial use will come under the ambit of the GST, while ENA (potable alcohol) for human consumption will be exempted from GST. Elaborating on this, Sitharaman said, “The GST Council today has ceded that right to tax ENA to the states. If the states want to tax it, they are welcome to do it. If the states want to leave it, they are welcome to take a call on it. The GST Council is not taking a call to tax it, although the right to tax lies here. So in the interest of the states, we have, if I may use the word ceded that right to the states.”

The minister added, “A separate tariff HS code has been created at the eight-digit level in the customs tariff to cover rectified spirit for industrial use. Rectified spirit which comes under industrial use, will now have a separate HS code. The GST rate notification will be amended to create an entry for the ENA for industrial use and that shall attract 18% tax.” 

Commenting on the setting up of the GST Appellate Tribunal body, Sitharaman said that the council decided on some changes to the decisions taken in earlier meeting regarding the constitution of the body. She added, "The decision today is that the president and the members shall have a tenure of up to a maximum age of 70 and 67 years, respectively." Earlier, the age limit for the president of the appellate body was 67 years and that for the members was 65 years. 

The finance minister also confirmed earlier reports that millet food preparations will be taxed at a reduced rate of 5 per cent. She stated, “One of the most important, which I like to say with a sense of happiness that the GST Council wanted to participate in the year of millets and therefore GST's role in the promotion of millets is seen in that. Food preparations of millet flow in powder form containing at least 70% millets by weight...I want to emphasize they fall under the category of HS 1901... So in powder form millets being blended with any other flour, where the millets composition is 70%, we state that they will be having a 0% GST if sold in other than pre-prepackaged and labelled form...So 0% if they are sold loose, and 5% only if sold pre-packaged and in a labelled form.”

Chhattisgarh Deputy Chief Minister T S Singh Deo, while in conversation with reporters after the meeting, stated that certain states like Delhi and Goa raised the issue of online gaming companies facing GST evasion notices for the last six years. He said, “States, like Goa, called for the withdrawal of retrospective taxes. For instance, if the net revenue is Rs 3,000 crore, the tax component is coming up to Rs 16,000 crore or Rs 18,000 crore and it is being levied retrospectively.” He added that the Union finance minister clarified that the government cannot interfere in the decision-making process of any independent body and can only provide clarifications if required.