Liquor makers hail withdrawal of COVID cess by Delhi govt, say 5% hike in VAT reasonable

Liquor makers on Sunday welcomed the Delhi government's decision to withdraw 70 per cent Special Corona duty on liquor after increasing VAT to 25 per cent, and termed the move to be reasonable.

The step would benefit all stakeholders, as sale of liquor was going down in the Capital city following high tax rates, according to Confederation of Indian Alcoholic Beverage Companies (CIABC).

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Though the Delhi government has withdrawn the tax, it has increased the value added tax (VAT) on all categories of liquor from 20 per cent to 25 per cent. The decision was taken at a Cabinet meeting chaired by Chief Minister Arvind Kejriwal.

"We really welcome the decision of the Government to remove 70 per cent Cess in Delhi. We had repeatedly pointed out that such a steep increase will turn out to be counter productive as it would lead to fall in liquor sales and Government revenues," CIABC Director General Vinod Giri said.

The ''Special Corona Fee'' was imposed last month on the maximum retail price of liquor bottle as the government looked to earn additional revenue, hit badly due to the lockdown.

However, this had turned out to be counterproductive as despite an initial surge, sale of liquor had fallen drastically in Delhi in May, and the liquor makers had urged the government to remove the 70 per cent corona pandemic cess imposed on the sector.

"We are indeed very pleased to note that the government has responded promptly and appropriately to remove the cess and substitute it with tax increase which is reasonable and within our recommendations," Giri said.

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According to CIABC, this decision would benefit all stakeholders.

"This once again demonstrates that the government is continuously alive and sensitive to the interests of the state, industry, trade, and consumers and has the courage to take prompt action in interest of all stakeholders," he added.

CIABC is the apex body of Indian alcoholic beverage industry and its members include most major Indian companies, which manufacture and market their product range in India and abroad.

Last month, several state governments imposed additional tax on liquor, after sales resumed in the third phase of the lockdown.

States like Andhra Pradesh, Delhi and West Bengal have imposed 75, 70 and 40 per cent additional levy, respectively on liquor, which resumed window sales from May 4.