Liquor industry urges Government not to increase excise duty in this Budget

Says higher excise duty and inconsistent excise policy hurting revenue collection for Government

February 14, 2022 09:00 pm | Updated 09:06 pm IST - Bengaluru

Urging the State Government to harmonise excise duty structure in Karnataka, the Wine Merchants Association, Karnataka, on Monday said that the skewed excise duty structure and inconsistencies in excise policy is deterring excise duty collection in the State, and is also deterring responsible drinking.

While Karnataka sells one of the highest bottled alcohol beverages in South India, it lags severely in per case excise revenue collection as compared to other States, the federation said ahead of the State Budget being presented by Chief Minister Basavaraj Bommai in March.

Comparing Karnataka and Telengana, the federation said that Karnataka sold 60.09 million cases and collected excise duty of ₹21,584 crore in 2019-2020 against 34.88 million cases sold in Telengana that realised excise revenue of ₹22,210 crore. “This clearly shows that Karnataka despite selling almost 72% more spirits than Telengana by volume, excise revenue collection was less by almost 3%,” it said.

The per case revenue yield in Karnataka is lowest among southern states, it said, pointing to the revenue per case of liquor sold in Karnataka at ₹3,592 compared to ₹6,367 per case in Telengana, ₹5,740 in Andhra Pradesh, ₹5,480 in Tamil Nadu and ₹5,737 in Kerala during 2019-2020. “This despite Karnataka selling 60.09 million cases and second in terms of volume to Tamil Nadu that sold 60.46 million cases in South India.

The skewed revenue, the federation said, is due to the fact that the spirit sale at low end in Karnataka is very high at 93% of the total volume as compared to any other major market in the country, resulting in lower per case revenue. In Telengana, lower end liquor contributed to 49% of total spirit sales. “On contrary, popular and premium IMFL brands, which have high sale potential in the State, is witnessing muted sales owing to very high excise duty, probably the highest in the country.”

The vice-president of federation Karunakar Hegde said: “Those travelling from other States carry one or two bottles of higher segments and Karnataka is losing out on the revenue. We have urged the Government not to hike the excise duty on IMFL.” As the Government hiked the duty by 17 % during COVID-19, the sale of alcohol decreased by 10 to 20 %, and Government realised its annual target because of the duty hike and not due to higher sales, he added.

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