The Union government is considering a uniform tax on liquor across India, which will result in products being sold at the same retail price anywhere in India. It is a significant development as the whisky tastes the same anywhere in India but is priced differently. This is because of varying rates of sales tax and excise duty across states. The food processing ministry wants the creation of a panel of state finance ministers, and the Union ministers of agriculture and commerce, to work with it on a uniform tax regime.
Earnings from local taxes on liquor account for a significant proportion of the inflow into state treasuries. It is not clear what sops or incentives will be demanded by the states that will lose money if they move to a uniform tax for liquor because their existing levies are at a much higher level. The proposal will help the liquor industry (excluding country liquor) to adopt a uniform retail price for brands across India.