BENGALURU: After Delhi and Andhra Pradesh governments announced a steep hike in liquor prices, Karnataka on Tuesday indicated slapping a Covid-19 tax -- in the 5%-15% band -- on alcoholic beverages of all categories. This is in addition to the 6% additional excise duty, announced in the budget, that came into effect on Tuesday.
Encouraged by record liquor sales on Monday and Tuesday after lockdown restrictions were relaxed, the cash-strapped government is set to expand its retail chain run by Mysore Sales International (MSIL) by opening 450 liquor outlets. Private players, too, are seeking licences to start new outlets.
Government could earn Rs 285 crore more a month
With these measures, the government is looking to offset the Rs 2,600-crore excise revenue loss suffered in the lockdown period. Sources said the government is likely to take a decision on Covid-19 tax next week.
If the government slaps a 15% tax, then a bottle of liquor with a price label of Rs 1,000 will cost Rs 1,150.
Sources said the government would earn Rs 95 crore (if new tax is 5%) to Rs 285 crore (if it’s 15%) more a month, going by the monthly target of Rs 1,900 crore. This back-of-the-envelope calculation takes into account revenue generated by retail and MSIL outlets, which have been permitted to operate after the lockdown was relaxed on Monday, and not of pubs, bars and outlets in star hotels which are yet to open. Excise minister H Nagesh told TOI the government is exploring all avenues to make more revenue with the objective of recovering losses and increasing collection.
Senior finance department officials said they have held consultations with industry stakeholders, including manufacturers and retailers, on the special tax proposal. “The government has the mandate to impose tax, but it must not overburden consumers. The tax rate should be logical and scientific,” said Arun Kumar Parsa, president of Karnataka Brewers’ and Distillers’ Association.
Excise commissioner M Lokesh said they will start new MSIL outlets once the situation improves and added that preparations were already on. Welcoming the government’s proposal to open more MSIL shops, G Honnagiri Gowda, president of Karnataka State Wine Merchants’ Association, said: “The government should also consider issuing new retail licences to unemployed graduates as it would generate jobs and bring in more revenue.”
Encouraged by record liquor sales on Monday and Tuesday after lockdown restrictions were relaxed, the cash-strapped government is set to expand its retail chain run by Mysore Sales International (MSIL) by opening 450 liquor outlets. Private players, too, are seeking licences to start new outlets.
Government could earn Rs 285 crore more a month
With these measures, the government is looking to offset the Rs 2,600-crore excise revenue loss suffered in the lockdown period. Sources said the government is likely to take a decision on Covid-19 tax next week.
If the government slaps a 15% tax, then a bottle of liquor with a price label of Rs 1,000 will cost Rs 1,150.
Sources said the government would earn Rs 95 crore (if new tax is 5%) to Rs 285 crore (if it’s 15%) more a month, going by the monthly target of Rs 1,900 crore. This back-of-the-envelope calculation takes into account revenue generated by retail and MSIL outlets, which have been permitted to operate after the lockdown was relaxed on Monday, and not of pubs, bars and outlets in star hotels which are yet to open. Excise minister H Nagesh told TOI the government is exploring all avenues to make more revenue with the objective of recovering losses and increasing collection.
Senior finance department officials said they have held consultations with industry stakeholders, including manufacturers and retailers, on the special tax proposal. “The government has the mandate to impose tax, but it must not overburden consumers. The tax rate should be logical and scientific,” said Arun Kumar Parsa, president of Karnataka Brewers’ and Distillers’ Association.
Excise commissioner M Lokesh said they will start new MSIL outlets once the situation improves and added that preparations were already on. Welcoming the government’s proposal to open more MSIL shops, G Honnagiri Gowda, president of Karnataka State Wine Merchants’ Association, said: “The government should also consider issuing new retail licences to unemployed graduates as it would generate jobs and bring in more revenue.”
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