http://www.agencyfaqs.com/news/stories/2005/08/22/12386.html
Govt plans uniform excise duty for alcoholic beverages across India THE ECONOMIC TIMES M Padmakshan MUMBAI The central government plans to call a meeting of all state excise commissioners to discuss possible guidelines for a uniform excise duty for the spirits industry. The ministry of food processing has issued a notification inviting comments from various stakeholders in this matter, including state governments, industry bodies and consumer forums on the proposed common guidelines for state excise duties. "We will be convening a meeting of all state excise commissioners soon after we receive comments from the states and the industry and other concerned people," NP Sinha, the secretary, ministry for food processing said. The idea, proposed by the industry, is to have a nationwide uniform excise duty on alcoholic beverages. Government sources say the discussion only centres around duties for the spirits industry. The guidelines on duty on beer and country liquor will be discussed later. Industry leaders are advocating a uniform rate on the lines of the Value Added Tax (VAT). All the sate governments together generate about Rs 40,000 crore from alcoholic beverages. Since spirits is a state subject, each state has evolved its own policy with varying rates of excise duty - ranging from Rs 500 (Goa) per case to Rs 2,000 per case (Rajasthan). Such differences result in smuggling of goods from one state to another. The revenue generated from alcoholic beverage industry constitutes 90% of the state excise duties. Together, state governments generate Rs 20,000 crore from spirits industry, Rs 10,000 crore from the beer industry and another Rs 10,000 crore from country liquor. According to industry sources, uniform rules would not affect the states' revenue collections. It will instead help the government generate more revenue. The industry has suggested that instead of states levying taxes under up to 30 heads, these states should be directed to levy the taxes under four heads i.e. excise duty, license fees, label/brand fees and sales tax/ VAT. VK Rekhi, president of Confederation of Indian Alcoholic Beverage Industry and also president of Spirit Division, UB says, "Because of its low excise duty rates Goa has became a hub for smuggling IMFL products to neighbouring states such as Maharashtra. " The industry also wants the government to implement the principles of progressive taxation. Now, most states levy the excise duty at a flat rate, irrespective of the cost of the product. Thus, the higher income group and the low income group pay tax at the same rate. R Vaziraney, president, marketing, Radico Khaitan says, "If tax is less on low priced product, the low end consumer would get the product at a cheaper rate. It's all right if the duty is levied at a higher rate on high end product because price of the product is not a major factor for the high end consumer. " Besides, a rationalised excise regime will encourage foreign investment in this sector, industry sources said. The difficulty of dealing with "26 states within India" is a major worry of the foreign players looking at the Indian market. -- Cheers, Gabe Menezes. London, England