Coronavirus crisis: Why sale of liquor matters to state? Which state collects more in revenue?

New Delhi, May 06: As the central and state government began to ease of restrictions in the third phase of the nationwide lockdown, several pictures of people standing in long queues outside liquor stores came to light. Also, the Delhi government announced a 70 per cent hike in the price of liquor across categories in the capital, starting Tuesday.

It can be seen that the manufacture and sale of liquor is one of the major sources of their revenue, and the reopening the sale of liquor comes at a time when the states have been struggling to fill their coffers amid the disruption on account of the lockdown.

Which states collect the highest amount as revenue?

According to reports that are available for the year 2018-19, five states that collected the highest revenue from excise duty on liquor were Uttar Pradesh with Rs 25,100 crore, Karnataka with Rs 19,750 crore, Maharashtra Rs 15,343.08 crore, West Bengal Rs 10,554.36 crore and Telangana Rs 10,313.68 crore. However, state-wise figures are not available for amounts collected as VAT and special fees on import for foreign liquor.

One of the reasons why Uttar Pradesh collects the highest revenue is that it levies only excise duty on manufacture and sale of alcohol. It does not collect VAT separately, unlike states such as Tamil Nadu, whose VAT collections do not reflect in the excise duty collections.

What is state excise?

It can be seen that state excise is imposed mainly on liquor and other alcohol-based items. Revenue receipts from state excise come mostly from commodities such as Country Spirits, Country Fermented Liquors, Malt Liquor, Liquor; Foreign Liquors and Spirits and so on. Besides, a substantial amount comes from licences, fine and confiscation of alcohol products.