Karnataka recently introduced a policy proposal to change the tax structure alcohol sold in the state. The policy proposed taxing liquor based on actual volume alcoholknown as the Alcohol-in-Beverage (AIB) tax system, which is popular in Western countries.
If implemented, the policy will lead to higher prices for cheap liquor, while prices for premium spirits are expected to fall slightly, brokerage firm Nomura said in a report.
Karnataka
Currently, Karnataka levies the highest tax on liquor at 83%, making it one of the most expensive places to buy liquor. The proposed policy is expected to rationalize prices by bridging the gap between budget and premium liquor.
The Karnataka the government invited objections and proposals from stakeholders from the industry until April 25. Vinod Giri, CEO Brewers Association of India said NDTV profit“It’s a historic policy reform for alco-bev companies. The AIB really is the gold standard in alcohol taxation. It’s based on the premise that the product to be taxed is the alcohol and not the water that comes with it.”
If enacted, Karnataka will be the first Indian state to adopt the AIB model of taxation and may even pave the way for other states to follow suit.
Where liquor is expensive
Let’s look at other states where the purchase of spirits will cost consumers dearly:
Maharashtra: has long been one of the states with the highest liquor prices, with an excise duty of 71% levied on Indian Foreign Liquor (IMFL). Last June, the state introduced a new policy of increasing excise duty on IMFL and imported liquors with the aim of creating an additional ₹Annual sales of 14,000 million crowns. Due to this, the prices in the state went up further.
This is followed rajasthan, which collects 69% tax, Telangana, with 68% tax and Uttar Pradesh, with 66% tax.
However, despite the high excise tax, Telangana leads all Indian states in spending on alcohol with an average annual per capita expenditure ₹1,623 on alcoholic beverages, according to a study by the National Institute for Public Finance and Policy (NIPFP).
Where alcohol is affordable
Meantime, Goa remains the most affordable state to buy spirits, thanks to its modest 49% tax. This is followed Delhiwhich collects a duty of 62% and Haryana with 47%.
It is important to note here that despite the higher excise duty, alcohol remains affordable in Delhi due to the rationalized MRP. Meanwhile, despite lower duty than Goa, alcohol is more expensive in Haryana due to inflated MRP.
Here’s a comparison of the costs of popular liquors in different states that he recently compiled Condé Nast Traveler India:
