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Why liquor isn't part India's new GST 2.0
India's new GST 2.0, rolling out on September 22, 2025, will slap a steep 40% tax on "sin goods" like cigarettes and pan masala.
But alcohol isn't part of this update—states still call the shots on liquor taxes because it's such a major source of their revenue.
Liquor taxes make up about 15-25% of states' own tax revenues
Liquor taxes make up about 15-25% of states' own tax revenues.
By keeping alcohol outside GST, states keep control and a steady stream of funds through their own excise duties and VAT rates—helping them stay financially independent while the central government raises taxes on other "sin goods," partly to discourage consumption.