The Bengal government is considering a change in the tax structure after liquor sales dropped in the state following a 30 per cent additional tax it had imposed in April just after the lockdown.
The state may do away with the 30 per cent additional tax but there will only be a partial relief for tipplers as a rejig in the excise duty is also being planned with changes expected to come into effect from September onwards.
Industry sources on Wednesday said that circulars could be issued in a few days.
“The net impact of both is expected to inflate the pre Covid-19 prices by around 15-20 per cent against the flat 30 per cent rise because of the earlier duty. Overall, MRP is expected to go down slightly,” an industry source said.
Bengal was among the top five states in the country along with Delhi, Andhra Pradesh, Rajasthan and Odisha that had drastically raised the duty on liquor to protect its revenues during the lockdown. But it turned out to be counterproductive as sales declined.
In Bengal there was an 84 per cent drop in sales by volume in April followed by a 35 per cent drop in May and the trend of year-on-year decline has continued in June and July.
Revenue down
Before the Covid-19 hit, the state’s revenue collection per month was around Rs 1,000 crore, which declined by a third as MRP was jacked up by the additional duty.
A decrease in MRP will give a much needed boost to sales before the festive season but the excise duty change is also being considered as the government needs money as well.
The Confederation of Indian Alcoholic Beverage Companies, which comprises manufacturers such as Allied Blenders & Distillers, Amrut Distilleries, Mohan Meakin and Radico Khaitan, had urged the Bengal government to cut the additional duty to a level of not more than 5-10 per cent in order to prevent a downward spiral in liquor sales.
Moreover, the additional duty had jacked up the price of Indian-made foreign liquor in Bengal compared with the neighbouring states of Assam and Jharkhand, raising the fear of smuggling.
