Delhi govt mulls change in excise laws to boost revenue from liquor sales

With an eye on increasing excise revenues, the Delhi government is planning to draft new policies for the sale of liquor. According to government officials, the implementation of reforms are likely to result in a 20 percent boost in excise revenues, from Rs 6,500 crore to Rs 8,500 crore. A committee of ministers has submitted recommendations to the Delhi state government Cabinet. Some of the key changes recommended by the panel included reducing the permissible age of drinking, the government exiting the liquor vend business, changing service laws in restaurants and hotels, and a new system of taxation.

Bars, pubs, and restaurants might get a boost with the deadline for serving liquor likely to be extended to 3 am from the current 1 am. The permissible drinking age is also expected to be lowered from 25 years to 21.

The reduction in the permissible age of drinking from 25 to 21 has been a long time coming, given that in nearly 60 percent of Indian states, the sale of liquor is allowed to persons of 21 years and above. This will be accompanied by measures to screen patrons at establishments. Some officials also said that those below the permissible age might still be allowed entry provided they are accompanied by family members of age.

The other critical recommendation is the government exit from the liquor vending business. Currently, around 60 percent of the vends in the city are run by the state government. The government will grant licenses to these vends through a bidding system. One of the primary reasons for the government to take this step is the uneven distribution of liquor vends. According to deputy chief minister Manish Sisodia, of the 272 wards in Delhi, 79 have no vends. The redistribution aims to put the number of vends in each ward at three. Sisodia added that the move would also tackle the liquor mafia in Delhi who run illegal vends in areas where there are fewer or no government-run vends.

Registration of liquor brands and a change in the tax and licensing fees structure is also likely. While at present a hefty excise amount is charged on each bottle sold, the government aims to charge a lump sum excise fee along with licensing fees instead and only charge 2-5 percent per bottle. This is expected to discourage vendors from cheating the government out of tax on individual sales.

Another bit of good news is that rules that apply to establishments such as restaurants and hotels which serve liquor are also expected to be updated. While currently, bars, pubs, and restaurants are allowed to serve until 1 am, this deadline is likely to be extended to 3am.

The fresh bidding of government-run vends is expected to be completed in three months, which is also the likely timeframe for the implementation of the new policies.

The hotels and restaurants industry, severely affected in recent times, welcomed the move. Anurag Katriar, president of the National Restaurant Association of India, said, “While we await the formal release of the detailed policy document, we are very hopeful that they will be very progressive and will significantly change the way Delhi looks at the business of bars.”

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