Wine Sales Tax Reduced in HP

Amidst several negative news reports from Maharashtra, Goa and the expected increase in excise duties in Delhi shortly, comes a bit of refreshing news from Himachal Pradesh that the sales tax has been reduced from 20% to 12.5%, reports Subhash Arora.

The change will be effective from April 1 this year.

This new tax rate may not be as lucrative for the consumer as the 4% VAT levied in the not-too-distant Chandigarh which still has one of the most pro-active and progressive wine policies and state taxes in India. But it will help increase the sales of wine and reduce leakages.

Government of Delhi could take a lesson from this move as the porous borders between Haryana and Delhi will surely create a headache for the city policing machinery if the duty and state taxes are substantially different. Even now, Haryana is vend-fee free while Delhi charges Rs.150 a bottle. Delhi is expected to charge a levy of 25% on MRP in a couple of days, as reported elsewhere on delWine.

In the meanwhile, the union budget announced by P C Chidambaram on February 29 with no change in duties has brought in cheers for the hotel industry that was fearing a gradual imposition of customs duty. DelWine had expressed its doubts on the possible taxation due to the strong lobby and the 2010 commonwealth games would make it easier for the industry to ask for the continuation of the dole.

The decrease of CST from 3% to 2% in the budget would mean a slight reduction in the cost of moving cases from Delhi to Haryana and other neighbouring markets.

The Delhi consumers are also hopeful of wine being finally allowed to be sold in the supermarkets. This will help the sale of imported wines and the domestic wine industry in a big way. The move has support from the Indian wine industry. Says Rajeev Samant of Sula,'we have nothing against wine sale through supermarkets in Delhi, like we have nothing against premium wines selling in Maharashtra without any excise deterrents.'

Punjab, on the other hand is regressive enough to have announced the increase in VAT from the existing 4% to 12.5%, to fall in line with the sales tax in HP.

Chandigarh, with a market of around 5000 cases, has announced no change in excise policy except an increase in License fee for department stores from 50,000 to Rs.100,000, effective April. This market is growing with speed and importers are rushing to catch the action. Says Chandigarh based Area Sales Manager for Sula, Raman Nijhawan,' we plan to introduce and promote our complete portfolio of imported wines including Australian Hardys, South African Two Oceans and the Chilean Gato Negro.'

With the existing scenario in the country, the Sulas of India might be pursuing the right policy of promoting entry level imported wines only, complementing wines from their Nashik stable.

Subhash Arora
March 4, 2008





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