Get ready for a twofold hangover, with prices and excise duty of liquor in the Capital expected to shoot up after the model code of conduct for the Lok Sabha polls ceases to be in effect. According to senior Delhi government officials, the excise department plans to amend not only the rates, but the existing tax structure as well.
“Soon after the model code is ended, we will come up with the excise policy for 2014-15, which will include revision in taxes and price structure too,” said JB Singh, excise commissioner, Delhi government.
According to senior functionaries in the administration, a proposal will be prepared detailing the price list, but sources said there may be an eight to 10 per cent hike in rates. A final decision will be made after MPs have taken oath.
For instance, a bottle of Kingfisher beer, one of the most popular brands, is available for Rs 60 in Delhi. The same costs Rs 140 in Noida and Rs 70 in Gurgaon. Following the revision, the bottle will come with a price tag of at least Rs 70 in the Capital. An increase in taxes will make it even more expensive. Though illegal, many Delhiites prefer to fetch premium liquor from neighbouring Gurgaon and Faridabad, because the excise duty there is significantly lower.
Justifying the move, senior officials said that a tax revision has not been done for the past few years, and this is hurting revenue collection. While in 2012-13 the department had accumulated Rs 2,869 crore, in 2013-14 it collected Rs 3,151 crore, though the target was Rs 3,200 crore.
“Tax collection has been good despite the fact that there were a number of dry days especially due to elections. A number of restrictions were placed on liquor vends that had witnessed a spurt of 30% or more in daily sale. At the same time, shops with stocks exceeding their last year’s level by 50 per cent were also under the scanner. We have to consider hiking the rates if we are to increase our revenue generation,” said a senior official from the excise department.
A step in that direction was taken when the department allowed sale of beer and wine in departmental stores in the city.
A number of people prefer to buy alcohol from neighbouring towns such as Gurgaon and Faridabad as the excise duty is much lower than Delhi. To put an end to this practice, the excise department had started cracking down on such people. “A drive was carried out by the excise intelligence bureau in the last week of April in which 14 people were arrested and 11 cases were registered against those trying to smuggle in alcohol from Gurgaon to Delhi,” said a senior official from the excise department.
To augment its revenue further, the excise department had recently said it was working on a proposal to grant permission for installation of micro brewery plants in malls, pubs and five-star hotels in the city.
While the department is planning to review the alcohol rates and even the tax rate, it is not planning to undertake a similar exercise for the luxury tax, stating that the industry is already hit by recession and an increase in the tax will affect them adversely.