In Goa, a bottle of liquor costs just ₹100, while the same bottle is priced at ₹305 in neighbouring Karnataka, ₹229 in Telangana, and ₹205 in Rajasthan. This significant price difference is due to varying excise duties and other taxes imposed by individual states. Goa imposes the lowest tax on alcohol, whereas Karnataka levies the highest. According to data from the International Spirits and Wines Association of India (ISWAI), Goa charges around 55% excise duty on liquor, while Karnataka’s rate can go up to 80%. Although Goa’s tax rates have increased slightly over the years, they remain the lowest in India.
Price Gaps for Popular Brands
The price disparity is evident even among popular liquor brands. For example, a bottle of Black Label Whiskey costs ₹3,310 in Delhi, ₹4,200 in Mumbai, and approximately ₹5,200 in Karnataka. These differences not only trouble consumers but also undermine the idea of ‘One Nation, One Tax’. The industry has consistently urged the government to implement a uniform tax system across the country, but state finance ministers have shown little interest in taking action.
Impact of Tax Disparities
According to a detailed report in the Times of India, inconsistent taxation has led to an increase in liquor smuggling between states. For instance, people in Delhi often travel to Haryana to buy cheaper alcohol, while in Tamil Nadu, many head to Puducherry for the same reason. As a result, high-tax states face significant revenue losses.
Why States Resist Uniform Taxation
After the implementation of GST, excise duty on liquor and VAT on petrol and diesel have become primary revenue sources for states. In the current era of freebie schemes, state governments are reluctant to give up their taxation rights. Finance ministers argue that these taxes help bridge revenue gaps.
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Industry’s Call for Reform
ISWAI CEO Sanjit Pande acknowledges that states need to raise revenue but stresses the importance of a sustainable model. Rationalising taxes could encourage consumers to opt for better and more premium products, supporting the ‘Drink Less, Drink Better’ philosophy. States like Maharashtra and Karnataka have already seen increased revenue through tax reforms, showing that such changes can be sustainable. The Confederation of Indian Alcoholic Beverage Companies (CIABC) has also labelled tax disparity a major challenge for the industry. CIABC’s Deepak Roy stated that there is no unified strategy for the Indian liquor industry, and a standardised tax structure is essential for its long-term growth.