Facing heat over the State taxes that are contributing to the spiralling prices of petrol and diesel, Maharashtra has begun looking for other sources of revenue, including a likely increase in the excise duty levied on Indian-made foreign liquor (IMFL) that would give it the space to consider paring local imposts on fuel.
“We have begun initial discussions on increasing excise duty on IMFL,” an official from the State’s excise department, said on condition of anonymity, adding that the duty had last been increased in 2013. “At present, we have not reached on the exact increase in excise duty as calculations are in progress,” the official added.
When contacted, Valsa Nair-Singh, Principal Secretary, Excise and Civil Aviation, said, “The file has not come to me yet. I wouldn’t be able to comment on it.”
Associations representing the IMFL industry have said any increase in excise duty would lead to an additional burden on consumers.
The BJP-led government in Maharashtra is facing increasing political pressure to help soften the impact of rising fuel prices by reducing State taxes. With Rajasthan, Andhra Pradesh and Karnataka having already cut State levies to bring down the prices of fuel, sources within the government have already hinted that Maharashtra too may follow suit as consumers of petrol and diesel in the State currently pay the highest price in the country.
The excise duty on beer was increased in 2017, while that on country liquor and canteen liquor was raised in 2015. According to officials, these two categories would be left untouched in the proposed duty increase.
Excise duty is one of the major contributors to the State’s revenue. According to the budget estimate for 2018-19, State excise duties are projected at ₹15,343 crore. Last year, the collection of excise duty suffered a short setback following the Supreme Court’s decision to shut down alcohol shops within 500 metres of highways. Even after the relaxation of rules, 3,000 liquor shops in rural parts of the State still remain closed as they are classified as being sited in villages with a population of less than 5,000. “Despite this, the department will achieve the target of collecting taxes,” the official said.
Dilip Giyanani, chairman of Maharashtra Wine Merchants Association, said the increase in excise duty would result in an increase in MRP and the customers would have to pay eventually. “We would like to request the government to not put the industry, which is already facing crisis, in further trouble by increasing excise duty. Ultimately, the consumers will have to pay more,” he said.