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It is generally believed and accepted that the excise duties on wines have already been exorbitant in Delhi. Both the domestic and imported wine sectors have been reeling under the heavy taxation and most producers and importers are struggling to barely survive. This could have been a factor appreciated by the government whose action is laudable. Of course, the wine romantics can feel elated that at least the Delhi government has finally taken some action (by not taking a negative action) to recognize wine as a healthy drink. However, the caveat from delWine is universally applicable- it is a healthy lifestyle drink when consumed in moderation.
The excise duty on wine continues to be applicable on the Wholesale Prices (WSP) declared. For up to Rs. 1000, the rate applicable is 65% of WSP and for the WSP higher than Rs. 1000, the additional charge is at 50% of the amount in excess of Rs. 1000. Thus a wine with a WSP of Rs. 1200 will attract a duty of Rs, 650+100= Rs.750.
The excise duty on domestic wines is lower and in 3 slabs starting with 65% for value up to Rs. 100, 40% on the slab of Rs. 101-250 and 30% for the additional WSP above Rs. 50. Thus for wine with a WSP of Rs. 300, the duty applicable will be 65+60+15=Rs. 140. (Although it is only academic, but a domestic wine with WSP of Rs.1200 will attract a duty of Rs.410 only).
The label registration charges on the other hand are weighed heavily against the domestic wines. For inexplicable reasons, the supply of domestic wines also has to be in full case lots whereas the imported wine may be supplied in lots of one or any multiple numbers.
The excise duty rates for each current year are announced during the beginning of the new financial year in April but this year they could not be announced as the Code of Conduct was in force due to the general elections for the Lok Sabha (Parliament). There had been no increase in the excise duty rates in 2013 as well. The current increase is apparently to catch up with the lost time too.
The excise duty collection for the year 2013-14 was Rs. 3151 Crores (Rs.31.51 billion), Rs.49 Crores less than the budget of Rs. 3200 Crores but Rs.282 Crores higher than the amount collected in 2012-13. A senior excise officer reportedly blamed the higher number of dry days and recent elections for the shortfall.
Ironically, Section 47 of the Indian Constitution gave the States independent power to formulate the alcohol marketing and taxation in order to encourage prohibition. But it has become a weapon to fill the coffers and a tool to unleash the bureaucratic power whenever higher revenues are needed to run the state. Delhi is not a full State but enjoys the status of a State for administrative purposes and has independent government and budgets. Due to the recent piquant situation created by the Chief Minister and his government resigning and with no single party willing to lead the Assembly as there was no clear mandate, it had been suspended and the Lt. Governor Najeeb Jung, the Constitutional Head of Delhi leads the administration for the time being. The taxation policy has been announced on June 17/18 after he cleared the new tax structure.
Although the policy is expected to yield additional Rs. 300 Crores, the government seems to have applied their mind by leaving out of the additional taxes wine in totality and the imported liquor, which are already reeling under heavy taxation. Of course, the increased taxation will mean more headaches for the excise department as the policing would become even more crucial what with the lower prices of liquor and wine in all categories in the neighbouring Haryana. The department claims that the strict monitoring resulted in higher tax collection last year despite no increase in the taxes but leakages still take place and cannot be completely ruled out.
The annual label registration policy from April-March, was also extended till June 2014 wherein the registration for the previous year 2013-14 may be extended by depositing pro-rata additional charges for the three months. There is no official explanation for the anomaly wherein the full year’s amount will have to be deposited for next year’s registration although the benefits would be for only 9 months. This has become more a routine than an exception. The licensees are not in a position to confront the department which is not complaining because this translates into extra funds in the excise kitty even though it is unanimously perceived to be an unfair practice.
The various rates are conveyed through the Gazette Notification dated 7 June, 2011 that may be viewed in detail by clicking the following link. The new rates as announced for Indian Beer and spirits are given below
Subhash Arora
Gazette Notification 2011 Gazette Notification 17 June, 2014
Tags: Excise duty, Najeeb Jung |