Saturday, July 13, 2024

Maharashtra’s Alcohol Tax Impacting Beer Consumption and Pricing

In recent years, the excise duty on beer has increased by more than 30% in Maharashtra, making beer significantly more expensive compared to hard spirits in the state.

Beer consumption in Maharashtra has remained steady, while the consumption of Indian-made foreign liquor (IMFL) has consistently risen over the past nine years. Industry experts suggest that the repeated changes in taxation for this soft beverage may be responsible, affecting both pricing and the alcohol-infused beverage (alco-bev) industry.

According to shared industry data, the maximum retail price of strong beer (650 ml) with higher consumption in the state has increased by 64% from the fiscal year 2013-14 to 2021-22, whereas the price of higher consumption IMFL (180 ml) has only seen a 10 to 20% increase during the same period.

Higher taxes on beer in Maharashtra impacts consumption of beverage

A spokesperson for AB InBev India said, ‘Maharashtra boasts several urban centers like Mumbai, Pune, Thane, Nagpur, and Nashik, where beer, a low-alcohol beverage, has become a preferred choice. Unfortunately, in recent years, the excise duty on beer has increased by more than 30%, making beer notably more expensive than hard spirits in Maharashtra.’

The spokesperson also highlighted that the ability to transport beer from different tax structures increases revenue for the state. They urged policy makers in Maharashtra to consider separate tax structures for beer at a different level. Several other states have reduced the excise duty on beer and provided relief in retail sales. For example, Haryana has reduced the excise duty on super mild beer and draft beer.

Higher taxes on beer in Maharashtra impacts consumption of beverage

Furthermore, they have reduced the license fee by up to 20% for pubs serving beer and wine specifically. Additionally, this allows employees in large offices (with over 5,000 employees and a minimum of 1,00,000 square feet of covered area in the same premises) to consume beer, wine, and other low-alcohol beverages.

Punjab and Uttarakhand have made beer even more affordable, while Odisha and Rajasthan have maintained unchanged excise duties on beer for the fiscal year 2023-24. Uttarakhand has allowed the sale of domestically-produced beer in department stores and malls, which was previously reserved for imported beer. Punjab has also announced plans to open ‘beer-only’ retail outlets. In contrast, Odisha has increased the excise duty on alcohol by up to 10% while keeping beer duties unchanged.

Himachal Pradesh has increased the excise duty on beer, but the difference in excise duty between spirits and beer has widened. Currently, beer has a 13% excise duty, while spirits are taxed at 18%.

Despite these changes in other states, Maharashtra has maintained higher taxes on beer, leading consumers to opt for spirits as an alternative. In terms of alcohol content, beer typically contains over 40% alcohol, making it cheaper than beer, which usually contains an alcohol content of 5 to 8%.

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