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Karnataka
`Higher tax on molasses won't cover revenue loss'
Our Bureau
Bangalore
March 16
Imposition of 20 per cent tax on molasses will not help the Karnataka Government make up revenue losses it will suffer because of banning sale of arrack.
A United Spirits official told Business Line that Karnataka should have pegged the price of an 180 ml bottle of IMFL at Rs 22-23 compared to Rs 26 currently.
The additional levy on raw material like molasses will push low-end IMFL brand out of the reach of those consumers who have been buying arrack so far, the official said. "Higher levies would result in increase in illegal trade."
Presenting the Budget, the Deputy Chief Minister, Mr B.S. Yediyurappa, said that the ban on the sale of arrack will be enforced from July 1.
The State will suffer a revenue loss of around Rs 2,000 crore as a result.
However, he said that the Government expects to recover the revenue loss by doubling the licence fee levied on retail shops, clubs, star hotels and bars.
The annual licence fee for retail shops has been increased to Rs 4.46 lakh from Rs 2.23 lakh in city municipal corporations whose population is over 20 lakh.
Clubs will have to pay Rs 5 lakh as licence fee compared to Rs 1.5 lakh. Mr Yediyurappa also announced that no new licences will be granted for sale of IMFL. Over 15,000 shops selling arrack will be closed as a result of the ban.
The Government has also abolished the permit fee of Rs 50 levied under the Karnataka Excise Act on grant of permits to transport IMFL and spirits and has announced easier norms for grant of transport permits.
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