Why sale of liquor is important for states

States' own taxes levied on items such as diesel, petrol and liquor constitute 30-50 per cent of the total revenue. State sales tax/VAT, now replaced by the GST, constitutes almost half of the total own tax revenue of states. When liquor was not allowed during lockdown and cargo movement by road  limited, states were getting  hit hard on these revenues.

Delhi government will charge 70 per cent extra tax on liquor. The decision came late in the night when chief minister Arvind Kejriwal asked the police to allow shops to remain open from 9 am to 6:30 pm. The tax will be on maximum retail price per bottle. The move was decided at a cabinet meeting chaired by Kejriwal.

After the Delhi government levied a Corona fee of 70% on the MRP of the liquor sold, the Andhra Pradesh government has also increased taxes on liquor by 50% to 75%. Earlier, Rajasthan government increased the taxes on liquor and beer by 10 percentage point. The maximum tax on liquor in Rajasthan is 45%. Others might follow suit given the state governments face tremendous scarcity of resources owing to outbreak of coronavirus and the resultant lockdown. Since taxes on liquor are outside GST, the states have the authority to change the rates without seeking permission from a central authority like GST Council.

There was chaos outside liquor shops as they opened after 40 days of lockdown yesterday. People flouted social distancing norms as they thronged outside shops in Delhi and some shops had to down their shutters due to the chaos. Only standalone liquor shops have been allowed to open while those in markets and malls still remain shut.

A customer made liquor purchases of Rs 52,841 on Monday after wine shops across the country were permitted to restart their operations. The bill has landed the Bengaluru shop in trouble with the excise department. The customer, who remains unidentified, purchased multiple bottles of 17 items violating excise rules amounting to 13.5 litres of liquor and 35 litres of beer..The excise department rules state that a seller cannot sell more than 2.6 litres of Indian Made Foreign Liquor (IMFL) or 18 litres of beer to a customer in a day. Once the bill started doing the rounds on social media, the excise department came to know of it. The retailer, Vanilla Spirit Zone, is based in Tavarekere in Bengaluru South.