In a surprise move, the Andhra Pradesh government last week had cut excise duty and value added tax (VAT) on low-end liquor, in a bid to mop up more revenues from the category by making it more affordable for daily wage workers and the rural poor..
The government has reduced the duty on lower category alcohol brands, also known as cheap liquor, to 15% from 25%. The tax reduction will make Indian made liquor (IML) of 180 ml bottle available for Rs 35-45, which means a savings of Rs 20 per bottle for the consumers, Business Standard reported.
The tax cut is expected to boost cheap liquor sales, helping the state to increase its income by 2,000-3,000 crore this year.
However, the government raised tax on beer, wine and Indian-made foreign liquor (IMFL) by 5-10%.
Meanwhile, the tax cut move on lower category brands attracted severe criticism from various quarters.
"Reduction in the price of cheap liquor was aimed at maximising revenue from liquor by making more daily-wagers addicted to the vice," The Hindu quoted B. Padma, State Secretary, Progressive Organisation of Women, as saying.
"The government's strategy seemed to make cheap liquor affordable to more people on the one hand and hike the tax of other branded liquor consumed by the rich," said V. Lakshmana Reddy, chairman, Andhra Pradesh Madya Niyanthrana Udyama Committee.
Earlier, in May, a report by The Times of India said that the state government was aiming a revenue of Rs.12,727 crore through sale of 30.3 million IML cases and 18.4 million beer cases in the current financial year 2015-16.
Andhra Pradesh saw sales of affordable IML rise to 28.9 million cases in 2014-15 compared to 27.5 million cases in the previous fiscal year.