Cheers! State may not increase excise duty this year

The State government is unlikely to effect any hike in excise duties for the financial year 2012-13.

In other words, prices of liquor, beer and wine will go up only if the manufacturers decide to increase the selling price.

Excise department officials point out that any increase in excise duty rates could be detrimental as it would encourage smuggling of liquor into Karnataka from neighbouring states and also spurt manufacture of illicit liquor.

At present, liquor in Maharashtra, Andhra Pradesh and Goa is cheaper compared to Karnataka. Low priced liquor is ferried across the boundary from these states and sold for a profit resulting in the State losing out on revenue.

Officials said experimenting with excise duties, which in turn would increase liquor prices, in the present scenario would be disastrous to the department.

The officials point out that while illicit liquor industry in the State has been on the wane, there is still a long way to go before it is completely curbed. Further, the government had announced hike in Additional Excise Duty (AED) between 10 to 20 per cent across 17 slabs on Indian made liquor (IML) in the last budget.

The excise duty structure for liquor and beer in the State works like this. For beer, the excise duty is Rs five per bulk litre and an additional excise duty equivalent to the declared price stipulated by the manufacturer is imposed. In other words, if the manufacturer fixes Rs 45 as the declared price for a 650 ml beer bottle then AED is levied on the same rate that is Rs 45 taking the MRP of the beer bottle to Rs 90, explain officials.
   
Complex duty structure

The duty structure for IML is more complicated. An uniform excise duty of Rs 45 per bulk litre is levied on IML irrespective of the brand and quality. On this, an additional excise duty is imposed depending on the declared price (the price fixed by the manufacturer).

The financial year has been good for the department. It is also set to meet the target of Rs 9,500 crore for the fiscal. For the coming fiscal, the State government is likely to set a target above Rs 10,000 crore for the department.

While consumption of beer and liquor has gone up, officials point out that the steps taken to curb manufacture and sale of illicit liquor has contributed to the fillip in resource mobilisation.

The department has cracked down on about 1,500 illicit liquor manufacturing units located across the State. There are 7,900  wine shops and bars in the State and the department is in the process of compiling data replete with photographs of every staffer working in these premises.

The department is also keeping track of more than 22,000 “accused persons”, who have been previously booked for violating the Karnataka Excise Act, 1965.