“Special Corona Fee” imposed on Liquor by Delhi Government

On May 4, 2020, the third phase of lock down began in India. Under the third phase, the liquor shops were opened in selected regions with certain restrictions.

Highlights

With the liquor shops opening after a long gap, there were long queues at store all over the country. The Delhi Government acted swiftly on the same day evening, imposing 70% hike in liquor prices. The State Government has taken the step in spite of the fact that liquor revenue is one of the major sources of revenue of state government.

How does Liquor contribute to state revenue?

Except for the states of Gujarat and Bihar, where sale of liquor has been banned, liquor contributes certain amount to the exchequers of all other state and union territories. The states in general impose heavy excise duty on liquor. For instance, the state of Tamil Nadu imposes VAT (Value Added Tax) on liquor. Uttar Pradesh imposes “special duty on liquor” and uses the funds collected to maintain stray cattle.

RBI Report on Liquor revenue

According to the report of Reserve Bank of India called State Finances: A study of Budgets of 2019-20, the excise duty on alcohol accounts to 10% to 15% of the state revenue of majority of the states. It is the second or third largest contributor. This was the main reason the state governments wanted liquor to be kept out of GST.

Earnings

The RBI report says that in 2019-20, all the states together had earned Rs 1,75,501 crores. This was 16% higher than that of 2018-19.

State Excise

The State Excise is levied on liquor. It includes country spirits, fermented liquor, foreign liquor, malt liquor, denatured spirits, medicated wines, toilet preparations containing alcohol, etc.

Month: Current Affairs - May, 2020