Kerala: GST commissioner seeks double-decker tax on mild liquor

By Aishwarya Nair | First Published Mar 8, 2024, 11:36 AM IST

The Kerala government may allow the sale of mild liquor with reduced tax soon. Based on this, the GST Commissioner has recommended to implement a double-decker tax on mild liquor.

Thiruvananthapuram: The GST Commissioner has recommended to have a two-tiered tax on mild liquor in Kerala. According to the recommendations, the tax has to be fixed in two slabs depending on the alcohol content. The state government is likely to allow the sale of mild liquor with reduced taxes, acceding to the demands of liquor producers.

The move to launch mild liquor is in line with the State Excise Department's liquor policy of 2022. The policy was to encourage low alcohol consumption. The alcohol produced in the state now has 42.86 per cent alcohol. Liquor producers are required to produce liquor with an alcohol content of 0.5 to 20 per cent. Of these, a brand with an alcohol content of 0.5 per cent to 10 per cent and another brand with an alcohol content of 10 per cent to 20 per cent will be launched.

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The GST Commissioner recommends that a 120 percent GST tax can be levied on brands with alcohol content up to 10 percent and a 175 percent tax on brands with 10 to 20 percent alcohol. These recommendations were forwarded to the Kerala government.

The tax department has to make the final decision as to how much percentage is required. Many liquor companies have approached the government with the demand for low alcohol production. There will be four slabs of tax on alcohol in the state, with two types of tax on mild liquor. The current sales tax is 251 percent on liquor above Rs 400 per case and 245 percent on liquor below Rs 400. If the demand for two slabs of mild liquor is accepted, the liquor tax will be four slabs.

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.

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