Liquor, sugar stocks stage mixed moves after GST Council reduces tax on molasses
Sugar and liquor stocks were in focus on Monday after the all-powerful GST Council decided to reduce the tax applicable to molasses significantly.
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12:42 PM IST
Sugar and liquor stocks staged mixed moves on Monday after the GST Council decided to reduce a levy applicable to molasses and removed extra neutral alcohol (ENA) from the purview of the indirect tax. Molasses, a byproduct of sugar production, is a liquid substance used in the manufacturing of extra neutral alcohol and ethanol, and ENA is a key raw material for the making of alcoholic liquor for human consumption—also known as potable alcohol—and serves a range of other industrial and commercial purposes.
Molasses will now attract GST at five per cent instead of the earlier 28 per cent.
Among liquor stocks, Aurangabad Distiller surged 9.7 per cent, and Radico Khaitan, Associated Alcohol and GM Breweries gained around 1-2 per cent, while Som Distilleries, Sula Vineyards, United Spirits and Tilaknagar Industries declined around 1-2 per cent. Among sugar stocks, while Shree Renuka Sugars, Avadh Sugar Energy, Triveni Engineering, Bannari Amman and Ugar Sugar were up around 0.5-1 per cent each, Dalmia Bharat, Kothari Sugars, Mawana Sugars and Sakthi Sugards were down 1-2.6 per cent.
In its 52nd meeting, the GST Council, gave states the exclusive right to tax ENA while deciding to exempt it from a central levy. Finance Minister Nirmala Sitharaman, who chaired the meeting, said the GST Council has decided to provide clarification on differential tax treatment for alcohol for human consumption and industrial use.
The finance minister also said that the reduction in GST on molasses will increase liquidity with mills and, in turn, enable faster clearance of cane dues to sugarcane farmers.
The move will bring big relief and stability to the industry, said the Confederation of Indian Alcoholic Beverage Companies (CIABC), the apex body for liquor firms.
High distilled or extra neutral alcohol, which contains 95 per cent alcohol by volume, is used for producing liquor and for industrial purposes.
With inputs from agencies
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