Kerala rejigs liquor tax

The budget has reworked the various taxes and cess applicable on IMFL which will result in a marginal price hike in retail price of IMFL in the state. The state budget increased the sales tax on IMFL to 200% and 210% for the IMFL brands costing up to Rs 400 and above Rs 400 respectively. The rates at present are 125% for brands costing up to Rs 400 and 135% for the rest. For beer, the budget increased the sales tax from the existing 70% to 100%. At the same time, the surcharge which was 10%, social security cess which was 10%, medical cess (1%) and rehabilitation cess (5%) have been done away with, retaining only turnover tax (5%) other than the sales tax. Since the surcharge was calculated on the final profit and the Kerala state beverages corporation (Bevco) used to pay the surcharge from the profit it earned, it did not affect the consumers. But after removing the surcharge and making corresponding increase in the sales tax, which will directly impact the customer, the government has brought down the profit margin of Bevco from the existing 29% to 7%, so that the IMFL prices will not increase substantially.