Liquor may get rid of CVD hangover from 1st

NEW DELHI: Come July 1 and your favourite foreign brand of whisky, wine or champagne will burn a smaller hole in your pocket. The Centre is likely to scrap countervailing duty (CVD) on imported liquor from July 1.

The government levies additional duties in the range of 20-150% on imported wines and spirits in addition to the Customs duty. While the duty on wines ranges from 20% to 75%, it ranges from 25% to 150% on spirits. The Customs duty on imported liquor ranges from 100% to 150%. The Centre would lose Rs 60 crore annually by removing the CVD.

The Centre has sent a communiqué to states asking them to work out a rejig of duties at state level from July 1, a source said. A final decision in this regard was taken last week at a meeting of representatives of various states and officials from the finance and commerce ministries.

The meeting decided in favour of scrapping CVD and duty rejig at state level from July 1 as a WTO panel is to discuss the European Union’s complaint against high duties on imported liquor in India in the first week of July. India is keen to address the issue of duty structure before the panel meets.

As part of the proposed duty rejig, states would levy a special tax equivalent to cumulative burden of excise and other taxes like luxury tax, brand tax and others imposed on domestic liquor. As per the new structure, the states’ levy would be same for domestic and imported liquor. The states will have to give national treatment to imported liquor in line with the country’s WTO commitment. Higher duties were imposed on imported wines and spirits to protect the domestic industry from the onslaught of foreign brands.

In some states, the new consolidated duty could turn out to be lower, resulting in lower prices. However, some states may wish to raise the duty on domestic liquor too in a bid to impose higher duty on imported liquor. However, this is a call that states have to take. The Centre has requested them to issue their respective notifications before July to facilitate implementation of the new duty regime from July 1.

The WTO had set up a disputes panel on April 24 to investigate the EU’s complaint against Indian duties and taxes on foreign wines and spirits. The EU had complained to the WTO last year that aggregate duty levied on imported wines and spirits in India ranged from 177.33% to 550% which exceeded WTO bound duty level of 150%. With the removal of CVD, India would be able to bring its duty in line with WTO-bound 150%.