VAT on Liquor
Value Added Tax compliance for bars, hotels, restaurants, clubs and retailers selling alcoholic liquor for human consumption.
Alcoholic liquor for human consumption is constitutionally outside the Goods and Services Tax, so its sale continues to attract state Value Added Tax alongside state excise duty and licensing. For a hotel, bar or restaurant this means running two tax regimes over one invoice: food and services under the Goods and Services Tax, liquor under Value Added Tax, with the turnover split correctly and both returns filed for the same period.
What our liquor VAT service covers
One bill, two tax laws, filed correctly every month.
- Value Added Tax registration for bars, hotels, restaurants, clubs and retail outlets
- Splitting a single customer bill between liquor under Value Added Tax and food and services under the Goods and Services Tax
- Applying the correct state rate to country liquor, Indian made foreign liquor, beer and wine
- Advising on the limited set-off available to liquor dealers under state rules
- Filing monthly or quarterly Value Added Tax returns alongside the Goods and Services Tax returns
- Handling assessments, notices and reconciliation of turnover between the two laws
What liquor VAT compliance turns on
Four issues specific to businesses selling alcohol.
Constitutional Exclusion
Alcoholic liquor for human consumption is excluded from the Goods and Services Tax by the Constitution, so it remains with the states permanently rather than temporarily.
The Bill Split
A restaurant bill covering food and drink has to be split between two returns, and the split has to hold up when the two turnovers are compared.
Limited Set-Off
States commonly restrict or deny input tax set-off on liquor, and Goods and Services Tax credit attributable to liquor turnover has to be reversed.
Excise and Licensing
Value Added Tax sits alongside state excise duty, licence conditions and permitted price structures, and the three have to be read together.
Our process
From initial consultation to completion.
Position Review
Reviewing your billing, licence and current filings across both tax laws.
Split and Rate Setup
Configuring billing so that liquor and non-liquor turnover, and their rates, are separated at source.
Monthly Filing
Filing the Value Added Tax return and reconciling it with the Goods and Services Tax return for the period.
Assessment Support
Handling notices and assessments, including reconciliation of the two turnovers for past years.
Why liquor businesses attract more scrutiny
What sets our approach apart.
The two turnovers are compared
Authorities compare the Goods and Services Tax return and the Value Added Tax return for the same period, and any gap between the two invites questions from both departments.
Credit attributable to liquor must be reversed
Input tax credit under the Goods and Services Tax cannot be retained against liquor turnover, and unreversed credit is a standard audit finding.
Excise records are cross-checked
Purchase and stock data held by the state excise authorities is compared against sales declared for Value Added Tax, so the two records need to agree.
Liquor VAT questions answered
What people ask before engaging us.
Running a bar or hotel across two tax regimes?
We will set the split up properly and file both returns from the same billing data.
