BENGALURU: The liquor industry is keeping its fingers crossed for the forthcoming State budget on March 4. The stakeholders’ biggest worry is that the government may hike liquor prices by increasing Additional Excise Duty, which may impact business and encourage bootlegging.
Industry sources told TNIE that they have written to the chief minister, requesting him not to hike liquor prices, citing acute business losses since the onset of the pandemic. But according to sources, the government, which is facing a severe revenue crunch, may hike AED by about 12 per cent.
“There was no increase in Excise duty last year. Because of two consecutive years of the pandemic, there is acute shortfall in revenue. Next year being election year, the government will need funds. They reportedly want to raise around Rs 18,000 crore additional revenue from across departments.
Excise is a cash cow and may have to bear the brunt of increased AED, despite negative feedback on any hike,” said sources. “It is not going to be an easy decision because any further hike on taxes will boomerang on the government next year.”
Meanwhile, sources said that retail liquor stores (CL2) have demanded an increase in commission from the present 8 to 10 per cent on Maximum Retail Price (MRP) on alcohol. In 2020, the State government had hiked the AED twice in a row -- once during the Budget that year, and again on May 5, a day after retail liquor stores were allowed to open for limited hours soon after lifting of Covid-19 national lockdown.
The AED was increased on all 18 slabs of Indian Made Liquor (IML) from 17 per cent to 21 and 25 per cent over and above the 6 per cent AED, which was increased with effect from April 1, 2020. The Bengaluru Chapter of the National Restaurants Association of India has written to CM Basavaraj Bommai for making changes in the GST structure for the F&B industry from the current 5 per cent without Input Tax Credit to 12 per cent with Input Tax Credit, reduction of Excise duties and AED on alcohol.