Kerala’s state government is reportedly considering a reduction in taxes on mild liquor sales, a move that aligns with the requests made by liquor producers. Initially opposed to the demand, the Tax Commissioner, who plays a pivotal role in such decisions, has taken leave, potentially opening the door for policy adjustments. The manufacturers have been advocating for tax reductions to stimulate production of mild liquor, intensifying pressure on the government in recent times.
Presently, liquor priced above Rs 400 per case is subjected to a sales tax of 251%, while those priced below Rs 400 face a slightly lower tax rate of 245%. However, due to these tax regulations, liquor below Rs 400 per case has become scarce in the market. With Kerala’s liquor typically boasting a high alcohol content of 42.86%, there’s a growing call for tax relief as producers aim to shift towards producing liquor with a lower alcohol content of around 20%. Manufacturers argue that such a shift could lead to increased sales, especially among demographics like women, tourists, and those in IT parks.
The introduction of ready-to-drink alcohol sales in neighboring states like Karnataka and Andhra Pradesh has further fueled the push for similar measures in Kerala. Despite initial concerns raised by Tax Commissioner Ajit Patil about potential revenue losses and issues of tax evasion linked to the sale of cheaper liquor, the government seems to be leaning towards considering the demands put forth by liquor manufacturers. However, amidst these deliberations, the sudden leave taken by the tax commissioner, coupled with allegations of expedited file processing possibly tied to electoral motivations, has stirred controversy and raised questions about the underlying motives behind the potential tax adjustments.
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