Thiruvananthapuram: In what could prove to be a boon for drinkers, a committee headed by the Kerala Revenue Secretary has recommended that the turnover tax imposed on liquor companies be revoked so as to avoid a hike in the prices and overcome the crisis in the liquor distribution business. The next Cabinet meeting may take a decision on the issue.
The committee recommended that the turnover tax, which is not imposed in other States, should be done away with. It reiterated the assurances given to the liquor companies earlier and which had been included in the liquor policy of the State Government.
Turnover tax, which was done away with in other States after GST was implemented, is being imposed only in Kerala. The distilleries in Kerala and companies from other States that manufacture liquor here come under the tax net. This tax amounts to 13 per cent.
These companies comprise 90 per cent of the firms that supply liquor to Kerala. Though it had been stated in the liquor policy that the turnover tax should be revoked, it has not been done.
The government sprang into action after the supply of liquor in the State was affected and tasked the committee with submitting its recommendations.
The committee consisting of the Revenue Secretary, Excise Commissioner and GST Commissioner was appointed to study the issue after the liquor companies cut their production citing increasing input costs and the majority of distilleries in Kerala closed down.
It is the second such committee appointed to study the issue by the same government.
The last time that the companies were allowed to raise the prices was in 2018-19 when extra neutral alcohol (ENA) which is used for liquor manufacturing cost Rs 48 per litre.
The price of ENA has now touched Rs 74 per litre. Though the companies demanded a hike in the prices, it was decided to recommend scrapping of turnover tax so as to avoid burdening the consumer.
