“Special Corona Tax” imposed on Liquor by Delhi Government

“Special Corona Tax” imposed on Liquor by Delhi Government

“Special Corona Tax” imposed on Liquor by Delhi Government

The 3rd phase of lock down began in India on May 4, 2020

Under the third phase, the liquor shops were opened in selected regions with certain restrictions.

What is Liquor Tax?

    • The Delhi Government imposed 70% hike in liquor prices
    • To be noted that liquor revenue is one of the major sources of revenue of state government.

How does Liquor contribute to state revenue?

    • Except for the states of Gujarat and Bihar, where sale of liquor has been banned, liquor contributes certain amount to the treasury of all other state and union territories
    • The states in general impose heavy excise duty on liquor
    • The state of Tamil Nadu imposes VAT (Value Added Tax) on liquor
    • Uttar Pradesh imposes “special duty on liquor” and uses the funds collected to maintain stray cattle

What is the RBI Report on Liquor revenue?

    • Reserve Bank of India released a report called State Finances
    • A study of Budgets of 2019-20, the excise duty on alcohol accounts to 10% to 15% of the state revenue of majority of the states
    • It is the second or third largest contributor
    • This was the main reason the state governments wanted liquor to be kept out of GST
    • The RBI report says that in 2019-20, all the states together had earned Rs 1,75,501 crores. This was 16% higher than that of 2018-19.

State Excise

    • The State Excise is levied on liquor
    • It includes country spirits, fermented liquor, foreign liquor, malt liquor, denatured spirits, medicated wines, toilet preparations containing alcohol, etc.

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