CHANDIGARH: Despite being one of the key sources of tax revenue, the excise earnings have stagnated in Punjab, yielding low growth rates in recent years, much to the chagrin of the state government.
The state excise accounts for 19% of the total tax revenue while the contribution of state Goods and Service Tax (GST) is 43%. The other sources of income include 16% from sales tax/VAT, 8% from stamp duty and duties on electricity and 6% from taxes on vehicles.
In four years, the compound annual growth rate (CAGR) increase in consumption has been 14% but the growth in consumption did not translate into an equivalent increase in excise revenues, which stood at 10.8%. The debt-ridden government is in the process of framing a new excise policy to generate additional revenue.
International Spirits and Wines Association of India (ISWAI) secretary general Suresh Menon held a meeting with the excise commissioner to discuss the roadmap to increase revenue from excise, which will help the state in reducing its debt. ISWAI called for a need to increase the minimum guaranteed quotas (MGQs) of Indian Made Foreign Liquor (IMFL) which at the moment are lower than the limit fixed in 2016, thus stunting revenue generation. Against the MGQ of 304 proof litres in Punjab, the neighbouring state of Haryana has two times higher quota than Punjab. It has been suggested that the government bring the IMFL quota to 380 lakh litres in the first year, which would mean an additional 10 lakh cases.
The government, however, will have to ensure mandatory physical lifting to ensure that the demand is actually met. The state has also been advised to encourage premium brands to maximise revenue and also promote premium retail vends for consumers to have a better buying experience on the pattern of Uttar Pradesh and Haryana.
To promote ease of doing business, ISWAI laid stress on having a digital online system for submission and process of applications for new label approval, brand registration, import permits and procurement for holograms. Despite guidelines in place, all the applications are manually processed in parallel resulting in delaying the approvals. The liquor industry in Punjab also faces the problem of procuring timely approvals for transferring/distributing stocks from distributor to wholesaler.
The state government has also been asked to enforce the track and trace mechanism for keeping a check on the production and movement of liquor. A recommendation has also been made for the creation of a working group to tackle the problem of illicit and counterfeit liquor.
ISWAI CEO Nita Kapoor said, “Excise revenue from the liquor industry in Punjab is at 33% and has not kept pace with the increase in consumption within the state. There is a chance to boost excise revenue by increasing the quotas of IMFL and Foreign Liquor (FL) in line with the consumption growth.”

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