Telangana may see 8-10% liquor price hike
HYDERABAD: Liquor prices in Telangana are likely to rise soon, with a high-level price fixation committee recommending an increase of around 8% to 10%, according to sources.
The committee was constituted after liquor manufacturers, or distilleries, approached the government seeking a revision of the basic price paid to them, citing a significant rise in production costs.
The excise department is also examining a proposal to increase the additional excise duty to boost state revenue. A comprehensive report covering both proposals is expected to be submitted to Chief Minister soon. The revised prices will come into effect if the proposals are approved.
Distilleries seek higher basic prices as costs rise
Distillery operators have told the excise department that rising electricity and transport charges, higher prices of glass bottles and carton boxes, and increased costs of raw materials such as rectified spirit and grains have squeezed their margins.
They have also pointed to higher labour costs, saying it was no longer viable to supply liquor to depots at existing prices. They sought an increase in the basic price to offset the rise in production costs.
The government subsequently appointed a price fixation committee to examine the request.
The committee studied the proposals submitted by distilleries and data on raw material prices in the market. It concluded that an 8% to 10% price revision was reasonable, depending on the liquor category, including regular Indian Made Foreign Liquor (IMFL) brands, premium brands and beer.
Government weighs higher excise duty to raise revenue
The government is also considering an increase in excise duty. Senior officials are examining the existing tax structure in Telangana and comparing excise duties in other states.
They are also calculating the additional revenue that could be generated by revising the excise duty in line with the increase in production costs.
How the liquor price is calculated
Liquor prices in Telangana are linked to a complex tax structure. The maximum retail price (MRP) is fixed by adding excise duty, special excise cess, value added tax (VAT), Telangana State Beverages Corporation Limited (TSBCL) margin and the profit margin of retail liquor traders to the basic price quoted by the distillery.
Liquor prices in Telangana were last increased substantially in May 2022 by the then Bharat Rashtra Samithi (BRS) government. At the time, prices of regular whisky and brandy brands increased by ₹20 to ₹40 a quarter, while premium brands became costlier by up to ₹80. Beer prices increased by ₹10 to ₹20 a bottle.
The excise duty was last increased in May 2020, after the Covid-19 lockdown, when the state government raised it by around 20% to 25%.
Officials are now preparing draft plans to revise the tax slabs in line with current market conditions.
The excise department has prepared two separate reports on the matter, according to sources. The first deals with the price fixation committee’s recommendation for an 8% to 10% increase in liquor prices. The second contains financial estimates of the revenue that could accrue to the government through an additional excise duty.
Both reports are expected to be submitted to the chief minister as formal proposals soon.
If the chief minister approves the proposals, the excise department is expected to issue an official government order on the price increase.
The move, if approved, would increase the financial burden on liquor consumers in the state.
