The stark disparity in liquor prices across Indian states has reignited debates over the ‘One Nation, One Tax’ principle. A bottle of spirits priced at INR100 in Goa escalates to INR305 in Karnataka, INR229 in Telangana, and INR205 in Rajasthan, primarily due to varying excise duties and taxes. Goa imposes the lowest excise duty at 55%, while Karnataka levies the highest at 80%, according to the International Spirits & Wine Association of India.
This tax inconsistency not only burdens consumers but also fosters bootlegging, leading to revenue losses for high-tax states. For instance, a bottle of Black Label whisky costs INR3,310 in Delhi, INR4,200 in Mumbai, and approximately INR5,200 in Karnataka. Such disparities prompt consumers to cross state borders for cheaper purchases, undermining local economies.
Despite industry calls for tax rationalization to promote sustainable revenue and curb illicit trade, state finance ministers remain hesitant to relinquish taxation powers. Post-GST implementation, excise on liquor and VAT on fuel remain significant revenue sources for states, making them reluctant to adjust existing tax structures.
The ongoing debate underscores the need for a balanced approach that harmonizes tax policies while safeguarding state revenues and consumer interests.
