This, explained excise officials, was because of a compounded (or tax on tax) tax structure wherein excise duty is calculated on the Centre’s Customs duty and on the derived price, a VAT is loaded.
Though initially only four brands received approval to their MRP, few more major brands are yet to come up with applications with a final price list for their products, said excise commissioner Kantilal Umap.
Slashing excise duty on this premium AlcoBev segment by a steep 50% from 300% to 150% in an attempt to crack down on smuggling and bootlegging has made 750 ml bottled-in-origin (BIO) spirits cheaper. “A Johnny Walker Black Label would cost Rs5,760; now it will be Rs3,750 for a bottle of 750ml. This is a reduction of about 35%. In the case of Red Label the reduction is 36%. For the other two brands the reduction is around 31%,” excise officials explained.
International Spirits and Wine Association of India (ISWAI) has hailed the tax cut decision by Maharashtra government, saying that it was nothing but a recognition for the emerging bottled-in-origin (BIO) spirits of premium quality.
ISWAI said the decision will significantly curtail illicit and spurious liquor and smuggling of AlcoBev (e.g scotch whisky) products, besides bringing in price rationalisation and price parity with other states. ISWAI CEO Nita Kapoor said these industry-friendly progressive policy change would improve tax compliance, eliminate grey market and inter-state smuggling, increasing state revenue collection.