With the rise in sales tax by four percent, the stage has been set for the increase of liquor price by two percent. This would mean that the retail prices of Indian made foreign liquor (IMFL) would go up in the range of Rs 10 to Rs 20 for different brands.
The decision to increase the sales tax by four percent was taken in order to make up for the revenue loss suffered by the government’s decision to discontinue the turnover tax (ToT) of five percent slapped on the liquor manufacturers within the state.
At present, the sales tax on IMFL is 237% for brands costing up to Rs 400 and 242% for brands that cost above Rs 400, which would now become 241% and 246%, respectively.
In the wake of the steep rise in the price of raw materials, liquor manufacturers producing IMFL within the state has been demanding to increase the liquor price.
But the government was not willing to increase the price as demanded by the manufacturers. The prices of extra-neutral alcohol (ENA)—the main raw material for the manufacturing the IMFL—had gone up from Rs 55 to Rs 72 per litre in the last one year.
The government has now decided to create a level-playing field for the liquor manufacturers in the state, as the ToT was not applicable for those who are manufacturing the IMFL outside the state and selling here.
The turnover tax was being slapped on the combined price, including the base price and the excise duty. The cabinet also decided to increase the warehouse margin of Bevco by one percent.
With the decision to do away with the ToT, the shortage of liquor supply in the state that was being experienced for the last few months, is likely to ease.