Other States

State to merge liquor taxes to plug leaks

The State government will merge taxes and duties levied on liquor to increase revenue collection and plug leakages. Deputy Chief Minister Ajit Pawar on Tuesday approved slew of measures to shore up collection and boost the State’s economy, which is reeling under a debt of ₹4.72 lakh crore.

One of the proposals suggested merging the sales tax charged on liquor served by restaurants with excise duty levied at the manufacturers’ end. This would increase revenue collection by ₹200 crore, senior officials said.

The decision will effectively abolish value added tax (VAT) charged on liquor at restaurants, and subsume it into excise duty without impacting the eventual MRP on the bottled liquor. “The proposal is among four other measures, including reducing the number of dry days, suggested by the State Excise Department to boost revenue. Overall, a decision was taken to approve the merger,” said a senior government official.

The government currently collects ₹17,000 crore in excise levies, which are its third-largest source of revenue. About ₹9,000 crore of the collections are made by the Sales Tax Department in the form of VAT, but the Excise Department has been demanding a single point of collection to plug the leaks.

The State government collects 35% VAT on the MRP of country liquor, Indian Made Foreign Liquor (IMFL) and beer. “The move would certainly improve collections and at the same time make it easy to do business related to liquor. We are expecting improvements in compliance as well,” said the official.

Excise duty is paid at the manufacturers’ end, while the sales tax in the form of VAT is collected much later. States like Kerala and Karnataka have already merged the taxes and successfully managed to reduce evasion. The one-point collection of tax will improve liquidity in the State systeMMm, officials said.

Multi-member ward system to be reviewed

The State Cabinet will on Wednesday reconsider the multi-member ward system introduced in the local bodies by the previous BJP-led government. The Cabinet will also review the direct election of chairman in local bodies introduced in 2017 by the earlier government to gain better control of local bodies.

The prabhag system had then mandated that each ward would return three to five corporators instead of one or two, as was the earlier practice.

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Printable version | May 26, 2020 6:35:31 PM | https://www.thehindu.com/news/national/other-states/state-to-merge-liquor-taxes-to-plug-leaks/article30570628.ece

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