GST Impact: Odisha Government Considering Ways To Avoid Excise Revenue Loss


Bhubaneswar: The state government is burning midnight oil to work out strategies to meet the shortfall in excise revenue following implementation of the Goods and Service Tax(GST) as there will be a levy of around Rs.140 Crore of GST and it will eat away revenue collected from excise sources.

GST has been levied on all the fees collected from different sources like IMFL, Beer, Country Liquor, Mahua, Bhang and several other tipsy items. Any fees  collected from excise items will attract 18 percent of GST. According to an estimate by the excise department, around 27 percent of excise revenue will now go to the GST accounts.

According to reports, an amount of Rs 139.11 crore will have to be diverted to GST head for 2016-2017 fiscal year on fees collected worth of Rs 773 crore from a total business amount of Rs 2929 crore in the state.

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

In order to minimize such an impact, the Telengana government brought in major changes in the nomenclature of some of the terms like “fees”. The southern state promulgated an ordinance to amend the Telengana Excise Act, 1968. Accordingly all “fees” were termed as “taxes”. This was done keeping in view that Union Government cannot impose any tax on the taxes already levied by the State.

The Odisha Government is reportedly studying the Telengana formula seriously  and whether it will follow the path shown by it is to be seen.

Along with it, the state government is looking out also for another way to avoid impact of GST.

Since Excise “Duty”  does not attract GST, excise officials and higher-ups in the department are seriously looking forward to that course whether to rename “Fees” into “Duty”.

Legal and tax experts are advising to rename existing levies as Tax or Duty under the Excise Act.

Legal Experts are being also consulted and soon the Department of Excise Department will have to take a final decision in the matter. As excise policy  has already been announced on April 1,2017, changes if any will attract change in existing excise policy.


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