The Government proposes to impose Goods and Service Tax (GST) on alcohol products except alcoholic liquor for human consumption. It is proposed in Constitution (122nd Amendment) Bill, 2014 that tobacco will be subjected to GST along with the Central Excise Duty. However, the rate of duty to be charged on this product will be decided by the GST Council as proposed in the Article 279A of the Constitution (122nd Amendment) Bill, 2014.

After introduction of GST, the VAT imposed by the states, Central Sales Tax, Excise Duty, Service Tax along with other indirect taxes would be subsumed into Goods and Service Tax. GST will simplify and harmonize the indirect tax regime in the country. It is also expected that introduction of GST will foster a common seamless Indian market and contribute significantly to the growth of the economy. Further, GST will broaden the tax base, and result in better tax compliance due to a robust IT infrastructure. Due to the seamless transfer of input tax credit from one stage to another in the chain of value addition, there is an in-built mechanism in the design of GST that would incentivize tax compliance by traders.

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today.

Goods and Services Tax to subsume existing indirect taxes, broaden the tax base and enable seamless input tax credits. The proposal designates Goods and Services Tax to subsume state VAT, Central Sales Tax, Central Excise, Service Tax and other indirect levies; excludes alcoholic liquor for human consumption from GST while bringing specified alcohol products within GST and subjecting tobacco to GST alongside Central Excise, with rates to be set by the GST Council. The framework aims to simplify and harmonize indirect taxation, broaden the tax base, and promote compliance via a robust IT-enabled input tax credit mechanism.