In this edition of Big Story, Moneycontrol's Sakshi Batra shares her insight on how states are imposing alcohol taxes to generate revenues.
Struggling with low revenues during the lockdown, several states have increased taxes on alcohol and have hiked fuel prices to make up for the revenue loss.
As per the FY21 budget of states, on an average, nearly 70 percent of their revenue is estimated to come from taxes. Of the total taxes, duties on fuel and alcohol are the major sources of revenue for states. Due to ongoing coronavirus-led lockdown, the loss of liquor tax is estimated at Rs 700 crore a day for all states.
Delhi government have imposed a 70 percent 'Special Corona Fee' on liquor and have raised value-added tax (VAT) on both petrol and diesel to generate revenue. Andhra Pradesh ordered two successive hikes on alcohol, currently at 70 percent.
West Bengal has similarly raised duty by 30 percent and Rajasthan by 15 percent. Uttar Pradesh too is considering levying a special tax on liquor to mop up additional revenue.
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