Hitting states hitting sales by imposing higher taxes on liquor

Mumbai, Ta. Saturday, October 24, 2020

Considering the impact of corona on tax revenue, the corona tax imposed on liquor sales by various states of the country has seen a fifty per cent decline in liquor sales instead of an increase in revenue.

The Confederation of Indian Alcoholic Beverage Companies has claimed that the states that have levied a tax of 5 per cent or more are likely to have lower tax revenue from the sale of liquor because consumers are buying less.

Several states in the country have increased the liquor tax in the name of coronavirus cess after the lockdown in May. Delhi had imposed a cess of 50 per cent but later reduced it.

At present, Puducherry, West Bengal, Rajasthan and Andhra Pradesh have 3% higher tax than in March 2020. State governments have pushed for a tax hike to boost revenue in the wake of the liquor lockdown after the lockdown, but the move is proving unfavorable, a confederation official said.

Rising prices have led to a decline in liqueur sales and even more so than the increase. In states where taxes have been raised, sales of alcoholic beverages have declined by 5 to 20 per cent between May and August, while states that have not raised taxes or made modest increases have seen sales fall by only 10 to 15 per cent.