One bottle, many rates: Rs 100 bottle in Goa costs over Rs 300 in Karnataka as taxes vary widely across country

Liquor

The recent data compiled by the International Spirits & Wine Association of India (ISWAI) showed that Goa continues to have the lowest excise duties on alcohol in the country, while Karnataka charges the highest. A bottle of alcohol priced at Rs 100 in Goa can cost more than three times as much in neighbouring Karnataka, Telangana, or Rajasthan due to the differences in state-level taxes.

Goa levies an excise duty of around 55 per cent, while Karnataka imposes an 80 per cent duty. While in other states like Telangana and Rajasthan, consumers pay Rs 229 and Rs 205, respectively, for the same Rs 100 bottle. The impact is more visible with premium brands, a bottle of Black Label whisky, for instance, costs Rs 3,310 in Delhi, Rs 4,200 in Mumbai, and around Rs 5,200 in Karnataka.

The sharp difference in prices comes as there is no uniform tax system across the country, which certainly challenges the idea of ‘one nation, one tax’. Despite repeated appeals from the industry to rationalise duties and create a more consistent tax structure, finance ministers of various states have shown little interest.

The high price gaps often lead to bootlegging and cross-border alcohol purchases. In Delhi, for instance, people often travel to Haryana for cheaper liquor. Similarly, residents of Tamil Nadu frequently buy alcohol from the Union Territory of Puducherry, where taxes are lower, TOI reported.

States have fewer tax options now that the Goods and Services Tax (GST) has been implemented. Fuel VAT and spirits excise now make up the majority of their separate revenue streams. Because of this, state governments are hesitant to eliminate or cut back on these sources of income, particularly during periods when populist policies and subsidies are making state budgets more burdened.

Sanjit Padhi, CEO of ISWAI, said there is a need to move towards a sustainable model that supports consumer choice and premiumisation through tax rationalisation. "While we recognise that the states have to augment their revenues, there is a need to build a sustainable model which focuses on stability and allows consumers to upgrade through premiumisation. This can be achieved through tax rationalisation and creating a pricing ladder that allows consumers to upgrade, thereby building the ethos of drink less, drink better. We have seen revenue growth in the past in states like Maharashtra and Karnataka, where price correction through tax rationalisation has helped in incremental revenue growth that is sustainable," he told TOI.

Deepak Roy of the Confederation of Indian Alcoholic Beverage Companies (CIABC) said the lack of a uniform taxation policy is a major challenge. “The industry needs a cohesive and uniform taxation strategy to support long-term growth,” he said.