Beer Industry Seeks Tax Based On Alcohol Content | SupportBiz


Beer Industry Seeks Tax Based On Alcohol Content

Beer has alcohol content ranging from 5% to 8%, while wine has 12% and above and IMFL at 42.5%.

New Delhi: Domestic brewers have asked the government to tax beer based on alcohol content as done in developed markets and said the popular beverage should not be clubbed with spirits.

Faced with flat growth this fiscal, All India Brewers Association said rationalisation in taxes was necessary also from a public safety point of view as people are moving towards towards hard liquor containing higher strength of alcohol.

"Beer should be taxed solely on the basis of percentage of alcohol content as done in the western countries to promote responsible drinking in India," All India Brewers Association Chairman Chris White said.

The beer industry pays tax ranging from 25 per cent to 65 per cent on a bottle. In Goa, it pays 25 per cent while in Delhi, Andhra Pradesh, Tamil Nadu and Maharashtra beer is taxed upto 65 per cent.

"Countries like France tax spirits five times higher than beer and Germany taxes six times higher. The reason being hard liquor has greater negative consequences for public health than beer," White said, adding that India's taxes are the highest globally.

Even BRICS nations like Brazil taxes 30 per cent on beer as compared to 47 per cent on spirits, while China taxes at the rate of 15-18 per cent. In Russia, beer with less than 8.6 per cent alcohol is taxed at 18 Rubles per litre, while spirits and beer above 9 per cent alcohol are taxed at 500 Rubles, he added.

According to the association, the beer industry in India was valued at USD 4.13 billion (Rs 24,000 crore) in 2013 and had contributed above Rs 15,000 crore to the state exchequer. "There are around 89 breweries in India and the sector supports over one million jobs in agriculture, pubs, bars and restaurants," AIBA Director General Shobhan Roy said.

He further added that it would affect the farmers also as the industry was purchasing barley and cereals from the local markets. "The industry is capital intensive as beer making is a complex process and requires sophistication and hygiene standards as compared to dairy/pharma industry," he said. According to the industry, it has made several representations to the government regarding its demands.

The industry had a CAGR (compound annual growth rate) of over 12 per cent between 2004 to 2013, while it declined to 3.3 per cent in 2012-13 and this fiscal, it is almost expected to have a flat growth, Roy added.