Before the implementation of GST the sugar mills had a fixed tax to pay. The mills were known to pay ₹ 750 per tonne which is considered approximately 12% and 12.5% tax on ethanol.

The implementation of GST has not brought good news for the sugar mills that are known to produce ethanol. The sugar mills have been asked to produce the details regarding input tax credit which is also known as ITC.

The report should include details of the tax pay off before GST implementation. In the report, it has been hinted that the ITC amount can be reduced from the amount. Additionally, the hope that now only GST would be applicable and inter state taxes would be applicable has been erased. Many states are yet to deduct the interstate tax even after the implementation of GST.

A letter to the sugar mills from the oil marketing companies says that according to the implementation of GST on July 1st, the sugar mills now have to pass the benefit of ITC reduction to the customers. This is the reason; the sugar mills are asked to declare all the details of input taxes to form a part of the basic price. This should be done on the element of input taxes.

The Cabinet decision of the last year which had been released in the month of October stated that the sugar mills would get the fixed rate of ₹39 on each ltr for the supply of ethanol on patrol blending. While the sugar mills get the fixed price, the oil marketing companies would be given the responsibility of paying the excise duty and the other taxes. However, the report also states that any other type of levies like interstate taxes would have to be taken care by the sugar mills.

More than 80% of ethanol gets produced by the sugar mills. As a result of this, the oil marketing company declaration would affect 20% of the ethanol supply.