Tax on CSD Liquor Exempted in these States

You might have curiosity to know about the amount of Tax imposed on the CSD Liquor you purchase every month. After implementation of GST, w.e.f. 01 July 2017, only VAT on liquor will continue to be loaded, as liquor is outside the purview of GST. In many states , no Tax is levied on CSD Liquor. A list of all States with applicable VAT rate is reproduced here.

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State-wise VAT on Liquor Sold Through Armed Forces CSD

Gujarat, Jharkhand, Bihar, Tamil Nadu – VAT Exempted.

Andaman & Nicobar Islands – 10% VAT.

Uttar Pradesh – VAT Exempted.

West Bengal – VAT abolished; however, 20% on MRP is charged as Additional Excise Duty.

Madhya Pradesh – 5% VAT.

Rajasthan – 3% VAT.

Karnataka – VAT Exempted.

Uttarakhand – VAT Exempted.

Delhi – VAT Exempted.

Maharashtra – VAT Exempted.

Andhra Pradesh – VAT exempted on liquor up to a basic price of ₹500 per case. Above ₹500 per case, 70% VAT is applicable.

Telangana – VAT exempted on liquor up to a basic price of ₹500 per case. Above ₹500 per case, 70% VAT is applicable.

Kerala – 70% VAT.

Goa – 22% VAT.

Haryana – VAT Exempted.

Assam – 40% VAT on IMFL; Rum is exempted.

Himachal Pradesh – 2% VAT.

Punjab – 4.004% VAT.

Odisha (Orissa) – VAT Exempted.

Nagaland – 5% VAT.

Jammu & Kashmir – 31.5% Additional Assessment Fee on the sale value of liquor.

Arunachal Pradesh, Tripura, Manipur, Meghalaya, Mizoram, Daman & Diu, Puducherry, Dadra & Nagar Haveli, Chandigarh and Sikkim – Not exempted; different tax rates are applicable in different States/UTs.

VAT Calculation Method on CSD Liquor

1. Manufacturer Stage

Manufacturer’s selling price including profit: ₹100.00

VAT @ 12.5% on selling price: ₹12.50

Selling price including VAT supplied to CSD Depot: ₹112.50

2. CSD Depot Stage

Invoice price received at CSD Depot: ₹112.50

VAT reflected in invoice: ₹12.50

Actual purchase price excluding VAT: ₹100.00

CSD Depot profit @ 7% on purchase price: ₹7.00

Selling price including depot profit: ₹107.00

VAT @ 12.5% on selling price: ₹13.37

Selling price including VAT supplied to URC: ₹120.37

Input tax credit (offset claim) by CSD: ₹12.50

Net VAT payable to Government: ₹0.87

3. Unit Run Canteen (URC) Stage

Invoice price received by URC: ₹120.37

VAT reflected in invoice: ₹13.37

Actual purchase price excluding VAT: ₹107.00

URC profit @ 6% on purchase price: ₹6.42

Selling price including URC profit: ₹113.42

VAT @ 12.5% on selling price: ₹14.17

Final selling price including VAT to customers: ₹127.59

Input tax credit (offset claim) by URC: ₹13.37

Net VAT payable to Government: ₹0.80

Key Takeaway

This example demonstrates the VAT input tax credit (offset) mechanism in the CSD supply chain. Both the CSD Depot and Unit Run Canteen claim credit for the VAT already paid on purchases and deposit only the differential amount of VAT with the Government. This prevents double taxation and ensures that VAT is ultimately borne by the final consumer.

GST – General Stores & AFD Goods

Exemption from GST on supplies (sales) made by CSD to Unit Run Canteen and on supplies (sales) made by CSD or Unit Run Canteens to authorized customers.

Canteen Stores Department is entitled to claim a refund of fifty per cent of the applicable taxes paid by it on all inward supplies of goods received by it for the purposes of subsequent supply of such goods to the Unit Run Canteens or to the authorized customers of the CSD.

50% non refundable GST + 100% Compensation Cess is loaded in selling price.

Information provided here are based on the CSD Manual available in the official website of CSD Dte, IHQ of MoD (Army). Rates and policy subject to change and review by the competent authority from time to time.