States see higher tax revenue in third phase
The officials cited above said the revenues, however, remain much less than what the states usually collect. The revenues from alcohol sales have also fallen after an initial rush at liquor shops once they were opened.Updated: May 16, 2020 08:46 IST
Revenue collections of states have shown signs of recovery during the third phase of the Covid-19 lockdown with a higher collection of excise and Goods and Services Tax (GST) as industrial activities have increased and many government offices have resumed work, multiple officials across the country said.
State governments last month reported a revenue dip of up to 90% and triggered fears that many of them may be unable to pay salaries for April. The relaxation in lockdown norms this month and the resumption of liquor sales have since boosted the revenue collections.
Almost all states except Kerala, which have higher per capita liquor consumption, have allowed alcohol sales. Kerala has increased the tax on liquor ahead of the resumption of its sale from May 18 when the next phase of the lockdown will begin with new rules. The state will impose a 10% Covid-19 tax on beer and wine bottles priced below Rs 600. For the rest of the alcoholic beverages, the tax will be 35%.
Punjab opened its liquor vends on Thursday.
The officials cited above said the revenues, however, remain much less than what the states usually collect. The revenues from alcohol sales have also fallen after an initial rush at liquor shops once they were opened. Several officials said they were awaiting the Centre’s help in bridging the revenue gap, which is expected to continue because of a huge dip in demand.
Haryana, where liquor sales were allowed from May 6, earned a revenue of Rs 93 crore till May 12 from them, state officials said. It is slightly higher than the tax collected during the same period last year--Rs 91.5 crore. In the first 12 days of this month, officials said Haryana has collected GST revenue worth Rs 340 crore compared to Rs 1,200 crore collected in May 2019.
Officials said the stamp duty has also increased from May 1 when Haryana allowed registration of properties. “We expect better revenue from May 18 when the lockdown is expected to apply only to the containment zones,” said a Haryana official, who did not want to be named.
Uttar Pradesh has reported liquor sales worth Rs 665 crore since May 4 when the state allowed them. State excise department officials said it is around Rs 250 to Rs 300 crore less than the sales recorded during the same period last year. “The lockdown is yet to be fully lifted and sales have been curtailed by three hours,” an official said, explaining less than expected liquor sales.
Liquor sellers have appealed to the state government for more relaxations like not paying license fees for the lockdown period. “The government must give us a hearing. What are we going to do if the business crashes,” said Lucknow Liquor Sellers Welfare Association office-bearer Kanhaiyalal Maurya.
An official in Rajasthan said the daily sales following the resumption of alcohol sale were as high as Rs 65 crore but the excitement is over. “Now it is Rs 45 crore, which is similar to daily revenue earned in May last year,” said the official on condition of anonymity. “The spirits have been dampened by adverse publicity by media,” the official said, referring to negative coverage over long queues at liquor shops in violation of the social distancing norms.
Revenue from liquor sales in Maharashtra, the worst-hit state by the pandemic, from May 4-12 was half of what it earned during the same period last year. Officials said this was because restaurants and bars have remained closed and liquor sales were happening only through vends. Civic bodies in major cities like Mumbai and Nagpur have also not allowed liquor shops to open.
Telangana, where the liquor sales started from May 6, revenue from them has also dipped after a good start. On May 6, the state earned 75 crore (as against average daily sales of Rs 60 crore), despite an increase in prices by 16%. “Since then, there been a fall in liquor sales by at least 60%,” said Telangana Wine Dealers’ Association president D Venkateshwar Rao.
The government earned Rs 68.50 crore revenue despite a 50% increase in liquor prices on May 4 when the alcohol shops opened in Andhra Pradesh. On the second day, the revenue dipped as the prices were raised by another 25%. “The second-day sales were Rs 50-55 crore. It has almost been the same since then,” said special chief secretary (excise revenue) Rajat Bhargava.
Telangana and Andhra Pradesh have reported a significant rise in revenue from the sale of stamps papers even as it remained less than what they collected during the same period in 2019.
Officials in Karnataka said there has been a jump in the GST and other revenue collection. They said revenue from liquor sales was now back to the normal level of Rs 50-60 crore daily.
Chhattisgarh has reported about an 80% increase in excise revenue in the first 12 days of May, as compared to April. Niranjan Das, the state’s excise commissioner, said there was about a 50% increase in liquor sales in the first two days of the resumption of liquor sales with per day average of Rs 28-30 crore. “Now, it is back to normal revenue of Rs 18-19 crore, including two crore from the online sale of liquor,” Das said.
Officials said GST and stamp duty revenue has also seen some improvement.
The government in Assam collected excise revenue of about Rs 150 crore in a week since the resumption of liquor sales. It is almost three times of what the state earned from the sale of liquor during the same time in 2019. “Last year, we collected Rs 2,700 crore from sale of liquor, and with the 25% hike [in prices from May 8], we expect to increase revenue by another Rs 1,000 crore,” said Assam excise minister Parimal Suklabaidya.