Kerala government may reduce tax on mild liquor sales next month

The Kerala government is considering reducing taxes on mild liquor, responding to demands from manufacturers in the state.

Thiruvananthapuram: The state government is likely to allow the sale of mild liquor with reduced taxes, acceding to the demands of liquor producers. The Tax Commissioner, previously opposed to the demand, has taken leave. Manufacturers have sought tax reductions to boost mild liquor production, intensifying pressure in recent years.

Currently, liquor priced above Rs 400 per case incurs a sales tax of 251%, while those below Rs 400 face a tax rate of 245%. Due to price increments, liquor below Rs 400 per case is scarce. With liquor in Kerala boasting an alcohol content of 42.86%, there's a call for tax relief as production shifts to 20% content. Liquor manufacturers claim that sales will increase if they produce mild alcohol. They also assume that women, tourists and IT parks will buy such liquor more.

Ready-to-drink alcohol sales have commenced in Karnataka and Andhra Pradesh, prompting liquor producers to push for its introduction in Kerala. Despite concerns raised by Tax Commissioner Ajit Patil about potential tax losses and leakage from the sale of cheaper liquor, the government is considering implementing the manufacturers' demand.

Amid deliberations on the final decision, the tax commissioner took leave, citing an earlier submitted leave application. However, there are allegations of hastened file processing to secure funds from liquor manufacturers ahead of the elections.  It is alleged that liquor manufacturers have given sponsorship money to the Nava Kerala Sadas and Keraleeyam event and therefore it is a move to reduce taxes as a sign of gratitude for that.