Rajahmundry: Election Commission curbs take the fizz out of liquor business

Rajahmundry: Production of several brands of Indian Made Foreign Liquor (IMFL) and Beer at the distilleries and breweries respectively have dipped as the government liquor depots sto-pped lifting huge stocks, following curbs imposed on their sale by the Election Commission of India as part of implementation of Model Code of Conduct for ensuing polls in the state.

This resulted in denting revenue to the state exchequer in the form of excise duty. The state government imposed excise duty on liquor to the tune of 22 per cent, additional excise duty of 10 per cent and value added tax of 55 per cent.

Excise duty on liquor varies from a minimum of Rs 40 to a maximum of Rs 110 per proof litre based on quality. A proof litre means the quantum of alcohol in a given quantity of liquor or beer. For instance, in a 650 ml beer, alcohol quantity will be nearly eight per cent and it varies depending upon the variety of beer.

The state government earns nearly Rs 17,000 crore per annum revenue from liquor trade and out of this, excise duty will be nearly Rs 5,000 crore while VAT comes up to Rs 9,500 crore which goes to the department of commercial tax.

The remaining Rs 2,500 crore will be the share of manufacturers as they invest to make liquor and beer and earn profit within that limit only.

As the Model Code of Conduct has come into effect from March 10, curbs on sale of liquor and beer at liquor retail outlets were imposed and they will last up to 6 pm on April 11.

The Election Commi-ssion of India has permitted lifting of stocks of liquor and beer from the AP State Beverages Cor-poration Limited depots by taking previous year’s quantum of sale as bench mark for the present sale, for the corresponding period, to avoid misuse of liquor to influence the voters to their side by the political parties.

Accordingly, the excise authorities are imposing restrictions on lifting stocks of liquor and beer from the government liquor depots and this in turn, has resulted in manufacturers reducing quantum of production of liquor and beer and this will continue until the Model Code of Conduct    is lifted by the end of polling.

Normally, the manufacturers of liquor pay exc-ise duty, additional excise duty, VAT to the excise and commercial tax authorities respectively when stocks of liquor and beer are lifted from their distilleries and breweries, based on the quantity, to the liquor depot.

With steep decline in the lifting of stocks, the     manufacturers have reduced the quantum of production of liquor and beer and payment of excise duty, additional excise duty and VAT has also come down in the last few days.

As the curbs on lifting of stocks last for nearly 32 days, from March 10 to April 11, it will have significant impact on the quantum of excise duty and VAT paid to the departments concerned. However, once the curbs are lifted on the quantum of sale of liquor, after conduct of polling, based on demand and supply in the market, manufacturers will produce the liquor and release it into the market while retailers sell accordingly.

A state excise top official said: “As curbs are imposed on the quantum of sale of liquor and beer as part of poll code,  the quantum of excise duty and VAT paid to the government comes down slightly for those days where curbs are in force. However, normalcy in collection of taxes will be restored, once curbs are lifted after completion of conduct of polls.”

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