Column Hungover on taxes

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: Indian wine drinkers and makers are waiting for an opportunity to raise a toast to a government policy that will bring uniformity in taxation and duties across all states in the wine sector, which is in its infancy and registering a growth of 25-30% annually.

It is time that wine is treated differently from hard liquor (it has much lower alcohol content) under the ministry of food processing—the wine industry assists agricultural diversification and employment generation in the rural sector and helps counter large wine imports. Also, it would help if the MRP of liquor is made uniform across the country, and there is consensus among states to bring about a uniform duty structure under four heads—excise & countervailing duty, sales tax, licence fee and label registration charge. The MRP must be mentioned on the bottle and sales tax is should be charged on the MRP mentioned. Consumers will be more comfortable with the fact that they are buying the same product in different places at the same price. Not only will it affect prices but also the product will become consistent. The uniform duty structure will also stabilise the differential pricing in various states due to the tax structure.

The lack of uniformity in sales tax rates and other charges by different state governments is a major deterrent in industry growth. Each state has a different tax structure and levies, and other regulations regarding licensing fees and sales of new brands. Currently, state-wise excise duties on liquor sales in India have drastic variations from Rs 25 to Rs 500 per litre across states, with Maharashtra imposing the highest duties and Punjab the least. This varied structure creates a situation where states at times draft retaliatory policies which benefit a select few wine makers and is not in the best interest of the end-consumer.