GST effect: Liquor price may go up in Tamil Nadu

CHENNAI: Tipplers in the State may soon be in low spirits as the Tamil Nadu State Marketing Corporation (Tasmac) is contemplating an increase in liquor prices, thanks to higher levies on packaging and services under the revised Goods and Services Tax (GST) regime kicking in. Although alcohol remains outside the GST net, manufacturers and distributors say new tax-related costs are set to be passed on to consumers.

A senior Tasmac official, who didn’t want to be named, said all types of liquor are currently taxed by the State through excise duties and Value Added Tax (VAT). “The GST 2.0 reforms, implemented from September 2025, introduced a 40% rate on so-called sin goods such as cigarettes and sugary drinks. Though alcohol is not covered, packaging materials like bottles, caps, and labels now attract an 18% GST, up from the earlier 12-15%, while transport services are also taxed at 18%,” he said.

“Several liquor manufacturers have already flagged that these hikes could push up retail prices, though the final decision from the authorities is awaited,” he added.

A senior executive from a liquor manufacturing company pointed out that producers cannot claim input tax credit on GST paid for goods and services used in alcohol production. “That makes GST a direct cost, which will inevitably feed into the final price,” he said. Company auditors are currently assessing the full impact of the new regime.

Tasmac, the State’s monopoly retailer, sells 551 brands — 302 spirits, 26 beers, and 223 wines — through 4,787 outlets and elite FL-11 shops. For 2024-25 (up to March), the corporation reported a net revenue of Rs 48,344 crore.