Union Budget 2021 proposes agri infra cess of 100% on alcoholic beverages

Experts believe that the prices of imported alcoholic goods will remain unaffected due to change in the composition structure.

Finance minister Nirmala Sitharaman announced that the government will impose an agriculture infrastructure and development cess (AIDC) on specified goods including alcoholic beverages, gold, silver, cotton, peas, apple, petrol, and diesel. Agricultural infrastructure cess of 100% has been proposed on all alcoholic goods. A 100% cess will also be imposed on fermented beverages, mixture of fermented beverages and nonalcoholic beverages.

The panel also suggested that full liquor bottles be allowed on tables and alcohol be served in open areas.representational photo (HT_PRINT)

"To ensure the imposition of cess does not lead to additional burden in most of these items on the consumer, the basic customs duty (BCD) rates has been lowered. This cess shall be used to finance the improvement of agriculture infrastructure and other development expenditure," the finance ministry said in a statement.

The agricultural infrastructure development cess will be applicable from February 2, 2021.

However, experts believe that the prices of imported alcoholic goods will remain unaffected due to change in the composition structure.

"For imported spirits and wines with alcoholic strength less than 80%, Basic Customs Duty has been reduced from 150% to 50% while Agriculture Infrastructure and Development Cess (AIDC) is being imposed @ 100% on the same value. The net effective rate of import duties remains at 150% and there will be no adverse impact on the industry," said Darshan Bora, Partner, ELP.

Agricultural infrastructure cess of 2.5% has also been imposed on gold, silver and dore bars, 35% on apples, 5% on specified fertilizer, 1.5% on coal, lignite and peat, 30% on kabuli chana, 10% on peas, 50% on bengal gram/chick peas, 20% on lentil (mosur), 5% on cotton.