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Posted: Monday, 20 January 2020 10:18

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50 percent cut on duty-free alcohol proposed in Union Budget

Jan 20: In what could be a major blow to the duty free shops at the airports and the returning travellers, the government proposes to reduce the duty-free allowance of wine and liquor from 2 bottles back to 1 liter each, with the possibility of a blanket ban on cigarettes, and the proposal may become a part of the Union budge to be announced on February 1, writes Subhash Arora who strongly favours 3 bottles of wine for each bottle of liquor because of lower alcohol content

The measures are part of a set of proposals prepared by the commerce ministry to reduce imports of non-essential items. If accepted. Finance minister Nirmala Sitharaman could announce them in the Union budget on 1 February, according to the Report in Livemint.

“This is part of our drive to reduce unnecessary imports. We have also recommended to the finance ministry a hike in duties on 200 items we consider non-essential," a commerce ministry official said on condition of anonymity.

Taxes on wine for returning travellers

The government takes the benchmark in many countries. For instance in the US only 1-bottle of 1-liter is allowed duty-free. But, the duties chargeable for additional bottles are reasonable. For instance, If you return from Europe with $200 worth of purchases, including two liters of liquor, one liter will be duty-free under your returning resident personal allowance/exemption. The other will be dutiable at 3 percent, plus any Internal Revenue Tax (IRT) that is due.

Tax rates on wines vary based on type and alcohol content, ranging from $1.07 per gallon (about 4.5 liters) for wines with 14 percent alcohol or less to $3.40 per gallon for sparkling wines, but lower rates also apply in 2018 and 2019 to smaller quantities of wine imported.

Allow more wine and beer

In any case, if the government is concerned about alcohol consumption, they should consider the alcohol content; most liquors have 40% alcohol while wine is usually 12.5-14 %. This means that every bottle of whisky has 3 times the amount of alcohol and thus even if 1 liter bottle is allowed for whisky, 3 bottles of wine should be allowed.

The ministry is also seeking a cut in the value of goods and gifts that can be imported free of duty-the current value is at Rs. 50,000 only.

Interestingly the Association representing the duty-free imports had asked for doubling of duty free imports from 2 bottles to 4 bottles-a step they would perhaps rue for raking up the issue.

It is unclear how the step is going to help the government in filling the gap of GST received less than expected, or impact the foreign exchange reserves which are in plenty or ‘Make in India’ campaign. These imports are insignificant delWine carries no truck for duty-free cigarette allowance but strongly favours an increased allowance of 3 bottles of wine in lieu of a bottle of liquor because of the parity of alcohol content.

For earlier Articles, please read our Blogs written over 10 years ago:

Blog: Six Bottles of DutyFree Wine on Arrival- Part III

Blog: Allow 6 bottles of DF Wines on Arrival-Part II

Blog: Case for 6-bottle Case of DF Wine at Arrival

Subhash Arora

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 Comments:

 
 

Subhash Arora Says:

 

I am sure government can collate. But not available in general, from newspaper reports. Of course, one could extrapolate from total current sales. Rule of thumb, half the sales are of liquor and about 40% is Black Label and perhaps Chivas, I am told. Wine sales are really negligible. Subhash

Posted @ January 21, 2020 15:54

 

Abhay Kewadkar Says:

 

Subhash, Is there any data available on Import and Sale of duty free Alcohol in India and thus potentially what is the saving in forign exchange one can expect ?

Posted @ January 21, 2020 13:00

 

Joseph Machado Says:

 

Looking at this selfish Scenario on 1 bottle only allowed sad future for Airport duty free there will be a slump ,nobody will feel the worth at looking at these shops it will called as double duty shops it s a very hustle bustle situation I woul prefer buying gray market duplicates

Posted @ January 21, 2020 08:56

 
       
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