Hyderabad, May 2026: Liquor retailers in Telangana have raised concerns over the collection of 2 percent Tax Collected at Source (TCS) by the Telangana State Beverages Corporation Limited (TGBCL), saying the move is putting additional financial pressure on shop owners and blocking working capital for long periods.
The issue has triggered strong reactions within the liquor trade as retailers claim that TGBCL is continuing to collect the higher TCS rate despite some traders possessing certificates issued by the Income Tax Department that permit lower tax collection rates based on turnover and financial eligibility.
According to industry stakeholders, liquor shop owners purchase stock every month from TGBCL, the state-run corporation responsible for supplying liquor across Telangana. During these purchases, TCS is collected in advance as part of income tax compliance requirements. Traders later adjust or claim refunds while filing their income tax returns.
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However, liquor retailers argue that the recent increase in TCS collection from 1 percent to 2 percent has significantly increased the financial burden on businesses, especially at a time when operational costs and market competition are already rising.
Industry representatives estimate that the higher TCS collection could temporarily lock up nearly ₹1,200 crore annually from the liquor trade ecosystem in Telangana. Traders said this would affect cash flow, inventory management and day-to-day operations for many retailers across the state.
Retailers further pointed out that under income tax provisions, eligible businesses can apply to the Income Tax Department for lower TCS certificates depending on turnover and tax compliance history. Based on these certificates, the applicable TCS rate can be reduced to lower slabs such as 0.5 percent, 1 percent or 1.5 percent.
Despite this provision, traders allege that TGBCL is continuing to collect the full 2 percent TCS in several cases, leading to dissatisfaction among liquor shop owners. Trade associations have reportedly sought intervention from authorities and requested the corporation to implement lower TCS rates wherever valid certificates have been issued by the Income Tax Department.
Industry observers say the development comes at a time when state governments are increasingly looking at excise and liquor revenues as a major source of income. Telangana remains one of the leading states in India in terms of liquor sales and excise revenue generation.
Liquor retailers have urged the government to address the issue quickly, warning that prolonged blocking of funds could impact business sustainability, particularly for smaller operators and retailers managing multiple outlets across the state.
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