The Maharashtra government on Thursday issued a notification slashing the excise duty by half. Reportedly, the 50% reduction aims to promote the legal import of liquor brands, effectively arresting bootlegging and/or smuggling of alcohol into the state. Now, the price of 1000 ml imported bottles, including scotch and whiskey priced between ₹5,800 and ₹14,000, will be cut down by 35-40%. Notably, the call on the reduction in prices will be taken by the affected liquor companies from Monday onwards.
Drop in liquor rate to boost sales & revenue
As per the officials of the excise department, the excise revenue through three FY terms, from 2016-17 till 2018-2019 was clocked at around ₹200 crores. However, the value dipped to 100 crores during the fiscal years of 2019-20 and 2020-21, due to the sudden inflation of sales tax. These values are independent of the COVID crisis, highlighted officials.
In addition to this, the revenue dip can also be attributed to the revised formula of the excise duty, enforced earlier. This led to a heavy tax rise on liquor, consequently causing the rates to shoot as well. The overall impact has significantly affected the sale margin and thus, the profit limits on alcohol.
The newly adopted tax cut, from 300% to 150%, is expected to give a push to the volume of sales, boosting sales and ultimately profits, officials elaborated. As detailed by the officials at the International Spirits and Wine Association of India (ISWAI), the excise duty fall will bring down liquor rates in Maharashtra to the Goan rates, since the total cut will inch near 35-40% only.
Overall, excise officials are expected the liquor sale to rise from the present 1 lakh to 2.5 lakhs, boosting the revenue equivalently from ₹100 crores to ₹250 crores. The move will also discourage people to smuggle alcohol from Delhi and other states into Maharashtra and promote domestic sales.