One bottle, many taxes: Why your liquor bill depends on city you are in

Liquor industry has been demanding tax rationalisation for long time.

At a time when India is inching toward the mega ‘One Nation, One Poll’ reform, the complicated excise duty framework reveals that it is still a country of ‘one bottle, many taxes.’

While many civil society leaders are advocating for ONOP as a cost-saving exercise, the varying federal tax structure is dampening the spirits of many partygoers. This is because, despite many concerns, states across India continue to levy taxes on liquor under different brackets.

A recent Times of India report highlights how states such as Karnataka and Telangana impose higher taxes on each bottle sold. In contrast, Goa maintains its tradition of lower alcohol taxes, the TOI report added.

So, if you think that hopping to Gurugram from Noida for cheaper booze is your party hack, think again. Citing the ISWAI data, the TOI report details the massive variation in the price of liquor bottle across all states.

While Karnataka charges 80% in form of excise duty on per bottle, Telangana imposes 72% duty. Other states that are in the middle order of this excise list, as per the TOI report include Rajasthan (64%), Maharashtra (71%) and Uttar Pradesh (68%). Some of the states that are in lower excise bracket include Haryana, which charges just 43% and Goa that has 55% in form of excise duty.

Why the taxes differ in each state for liquor?

To understand the varying duty structure adopted by each state, one needs to look at a basic concept of revenue generation. After the Centre introduced the Goods and Services Tax, excise duties on fuel and liquor remain the only major sources of income for states. Hence, many states are opposing the idea of bringing these two under GST and surrendering the taxation power.

Add to this, the TOI report says, the freebie ecosystem has put more burden on states to generate steady stream of revenue to fund various welfare schemes. This is because the states use the tax on liquor and fuel to bridge the fiscal deficit.