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MARKETING WINE IN STATES OF INDIA-

A ready referencer authored by Seth Associates, Advocates & legal Consultants, India

Introduction

The Constitution of India provides that the Indian Central Government is empowered to collect excise duties on a range of products. However, products defined as ‘alcoholic liquor for human consumption’ has been specifically excluded from such list and in principle, the Indian State Government have exclusive competence to levy excise duties on wines and spirits and determine their rates. It is therefore that each Indian State maintains a separate system for the taxation of wines.

There are twenty eight State and seven Union Territories, some of which formulate their own policies for the taxation of wines and spirits, and others operate under policies determined by the Central government. A limited number of Indian States also maintain a ban on the sale of alcoholic drinks. States which allow the sale of alcoholic drinks, wines and spirits are generally subject to a number of different indirect taxes.

The structure and denomination of these taxes varies considerably across the States, as does the resulting overall level of taxation. Common denominations of taxes include excise duty, special duty, vend fee, import fee, transport fee, assessment fee, gallonage fee, litterage fee, development fee, octroi, sales tax and VAT.

As far as Consumption of wines is concerned, it is heavily concentrated in urban centers such as Mumbai, Delhi, Bangalore, and Punjab. The following eleven Indian States account, according to the Imported Wine & Spirits Association of India, for approximately 90% of the wine market: Andhra Pradesh, Assam, Delhi, Goa, Karnataka, Maharashtra, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh and West Bengal. Consumption of wines in India by State:

State Market share (in volume)
Andhra Pradesh 1.2 %
Assam 2.2%
Delhi 10.7%
Goa 26.4%
Karnataka 19.4%
Maharashtra 25.9%
Punjab 0.9%
Rajasthan 1.0%
Tamil Nadu 1.5%
Uttar Pradesh 1.0%
West Bengal 2.0%
Sub-total 92.2%

Some Operational issues

Bureau of Indian Standards (BIS) prescribes standards for various alcoholic beverages. BIS specifications for IL are based on grade I RS and neutral spirit. The Standards of Weights and Measures (National Standards) Rules 1988 prescribe that alcoholic strength be declared as % of volume with symbol “% Vol”. Standards for water used and guidelines for hygienic practices in the manufacturing should be prescribed.

No advertisement, direct or surrogate, is permitted for promoting consumption of liquor, which also favours large companies. However, in order to enable consumers to make an informed choice and to promote responsible drinking, communication at the point of sale/consumption could be permitted.

The Packaged Commodities Rules are applicable to alcoholic beverages and it provides for affixing of labels incorporating following declaration: (i) Name and address of the manufacturer, (ii) Common name of the commodity (for example, Whisky/Rum/Wine/Beer) (iii) Net quantity when packed, (iv) Month and year of manufacture, (v) MRP. However, in respect of alcoholic beverages printing of MRP is not mandatory subject to the condition that the retailer shall display prominently in his premises the retail sale price of the package.

Several States require safety holograms, approved by the Excise Commissioners to be printed on every bottle of liquor. Safety holograms certify that duties/fees due on the particular bottle have been paid and the liquor is of prescribed standard. Barcodes on Liquor packs could be an effective tool for security and prevention of imitation or reuse of the packs of branded liquors. IL industry normally uses fresh bottle. But a specific registered brand bottle is sometimes recycled.
Presently following sizes are permitted in bottles (glass & PET), cans, pouches, and kegs:

Type Quantity (in Ml)
IMFL 750, 375, 180, in bottle
CL 750, 375, 180, in bottle and 200, 100 in pouches
BEER 650,330 in bottle and cans
Wine 750,375,187.5 in bottle

Various taxes and duties applicable to the wine industry

There are several taxes and duties that are applicable to the wine industry. A comprehensive list of the taxes and duties generally levied on wine are mentioned as: Excise Duty, Additional Duty, Distillery/Brewery License Fee, Bottling fee, Litterage fee, Assessment Fee, Franchise Fee, Permit Fee, Gallon age Fee, Raw Material Excise, Availability Fee, Brand/Label Fee, Permit Fee, Transportation Fee, Import Pass Fee, Export Pass Fee, Educational/Welfare Cess, Vend Fee, Sales Tax/Surcharge, License Fee, Toll Tax and TOT.

With regard to the commitment Indian Government had given to WTO, it has started the gradual reduction of Duties and Taxes on imported wines in India. A recent Government announcement (as reported on 7th July, 2007, Times of India) abolished the countervailing duty (CVD). It can surely affect the prices of wine from 157% to 273%. However, there is also a corresponding increase in the basic customs duty from 100% to 164% (150% customs duty plus additional taxes). Hence, with the existing import duties, taxes and VAT, wines will still cost almost 4-6 times to that of the actual value of the product. Indian Government had also decided to do away with the education cess on imported wine. However, different Indian States may impose local levies on imported liquor equivalent to taxes imposed on domestic liquor. All these steps will have deep impact on wine industry in India.

Please note that tax calculations in this referencer are updated with changes in tax regimes as in effect and applicable upto June 2007.

State-wise wine Policies

Maharashtra

Maharashtra is the most liberal state as far as liquor policy is concerned. Infact, the grape wine industry in Maharashtra has taken big strides in the last few years. Red, White, Rosae and Sparkling wines are produced in the state. With tax and duty structure moving southwards it is clear that several new players would come up giving an unsullied freshness to the existing competition between Indian and foreign players.

To further improve the condition of the wine market government is taking several new initiatives. A Wine Board is being set up. Even a Wine Institute is in the offing to improve quality. As per the Maharashtra Grape Processing Industrial Policy 2001, grape wineries have been given the status of food processing industry. There has been a huge cut in excise duties, which have been cut by 50% for the existing wineries and 75% for the new wineries. As a consequence to it from just three wineries in 2000, there are 36 today.

As per the Maharashtra policy guideline on ‘vendor licence for sale of wine’, wine bar licences will be available at rates between Rs 5,000 and Rs 37,500 a year depending on the location. Thus, a wine bar licence in Mumbai city will cost the maximum while it will go down as one moves to smaller towns in the State. Even single window shops are in pipeline. So, for Winery Industry, essential license, plot, electricity supply, telephone etc. infrastructure will be made available with One Window System.

Liquor coming from out of State and going to other States through the territory of a State require transit pass. In Maharashtra, power to grant transit pass has been given to the Inspector posted at the check post itself. This has eased the process. Maharashtra Industrial Development Corporation (MIDC) is the nodal agency for establishment of grape wine parks in the state. It has till date established two wine parks: Godavari Wine Park at Vinchur, Nashik District and Krishna Wine Park at Palus, Sangli district.

Model Cost Card for Wine- Mahrashtra
Details Per Case

750 ML

Manufacturer selling price

1575

Excise Duty @ 0%

0

Distribution Costs at 25% of MRP

788

License Fees at 5% of MRP (LF)

158

Sales Tax @25% of ECP or 20% of MRP

630

Total

3150

Govt. Revenue – Rs per case

788

Manufacturer share as % to MRP

50%

Distribution share as % to MRP

25%

Govt. revenue as % to MRP

25%

MRP PER BOTTLE

263

There are provisions for several licences for wine. The regulatory norms are elaborate and convoluted. It is pertinent for the smooth growth of the industry that the regulations are made easy and simplified together with the change in the over-all duty and tax structure. Licences for foreign liquor given by government include Fl 1, Fl 2 and Fl 3.

State Tax Local Wines Tax BIO Wines
(EDP = Rs 215 per 75cl bottle) CIF = Rs 107.50/bottle; CIF + BCD @ 100% = Rs215;
AD @ 25% = 53.75; CIF + BCD + AD = 268.75; EAD @
4% = 10.75
Landed Cost (LC) (inc AD & EAD) = Rs 279.50/bottle
Maharashtra Relevant indirect taxes
Import Fee (Rs 7/BL) = NA
Excise Duty = Nil
Total Tax Burden = Rs 0.00
Other indirect taxes
Transport Fee (0.25/BL) = Rs 0.19
Special Fee NA
Octroi
VAT = Rs 51.64
Total Tax Burden = Rs 51.83
AD and relevant indirect taxes
Additional Duty (AD) = Rs 53.75
Special Fee (Rs 200/BL) = Rs 150.00
Total Tax Burden = Rs 203.75
EAD and other indirect taxes
Extra Additional Duty (EAD)
268.75 x 4% = Rs 10.75
Transport Fee (Rs 0.25/BL) = Rs 0.19
Import Fee NA
Octroi
VAT = Rs 103.12
Total Tax Burden = Rs 317.81

Delhi

Delhi is the second most happening place for wine market. Though it still has a long way to go, but the consumer lifestyle choices and demands are changing rapidly and this has led to a great expansion of wine market in the region. The occasions like ‘Vinitaly India 2007’ and the likes are plateful in making the drink even more popular. Delhi volumes come largely from wines consumed by embassies / hotels since Sales to retail still has restrictions. Delhi rules permit BIO wine sales only to hotels / bars / clubs. Even the use of the mass media to promote alcoholic beverages is not permitted; but in-shop advertising or on-premise promotions are allowed in all states except Delhi.

There are several licenses for wine import, transport and warehousing of wines. The Licensees required for wine are L-2 (Retail Vend: 309), L-3 (Hotel-Room Service: 1), L-4 (Restaurant: 251), L-5 (Hotel-Bar: 47) and L-19 (Club: 54) etc. Permit Branch issues Import permits for import of liquor into NCT of Delhi and Transport Permits for transportation of liquor from Bonded Warehouse to off/on site licensed consumption premises. On an average 80 Import permits and 1800 transport permits are being issued daily.

Import permits are issued to the L-1 licensees on demand which is duly recommended by the inspector posted at Bonded Ware House. For issue of these Import permits, It is ensured that Excise revenue in form of Import duty i.e. Rs. 5/-per Bulk litre for regular brands (above Rs. 90/- per quart) and Rs. 1.25/- per bulk litre for cheaper brands (Rs. 90/- per quart) as applicable in respect of each brands have been realized as per the quantity for which the import permit is to be issued.

For Gin, Brandy, Vodka, Wine and Liqueur brands, no minimum sale criteria has been fixed. Once the licence is approved, the applicant is required to have a Bonded Warehouse approved for storage of liquor. Broadly speaking the applicant immediately on the approval of L-1 Licence has to deposit Licence Fee, Brand registration fee and Brand Fee & apply for the following :-

  • Registration of Brands
  • Approval of Bonded Warehouse
  • Approval of Label
  • Fixation of ex-distillery price

IMPORTED WINES COST CARD FOR DELHI

CIF $20 per case

CIF $40 per case

CIF $60 per case

Component of Price

Amount

As % of MRP

Amount

As % of MRP

Amount

As % of MRP

CIF Price

900

21%

1800

21%

2700

21%

Bonded price

1350

31%

2700

32%

4050

32%

BCD 150% of CIF

1350

31%

2700

32%

4050

32%

ACD as 0% of (CIF+BCD)

0

0%

0

0%

0

0%

Duty Paid Price

2700

63%

5400

64%

8100

64%

Wholesaler margin @5%

135

3%

270

3%

405

3%

Vend Fee @

475

11%

950

11%

1425

11%

Price to Retailer

3310

77%

6620

78%

9930

79%

Retail Margin Rs 12/ bottle

144

3%

144

2%

144

1%

Sales Tax 25%

863

20%

1691

20%

2518

20%

Retail Price per case

4317

100%

8455

100%

12592

100%

Retail Price per bottle

360

705

1049

Total Taxes including BCD

2688

62%

5341

63%

7993

63%

Total Taxes excluding BCD

1338

31%

2641

31%

3943

31%

Distribution Margin

729

17%

1314

16%

1899

15%

State Tax Local Wines Tax BIO Wines
(EDP = Rs 215/bottle) CIF = Rs 107.50/bottle; CIF + BCD @ 100% = Rs 215;
AD @ 25% = 53.75; CIF + BCD + AD = 268.75; EAD @
4% = 10.75
Landed Cost (inc AD & EAD) = Rs 279.50/bottle

Delhi

Relevant indirect taxes
Import Fee (Rs 5/BL) = Rs 3.75
Special Duty (Rs 20/BL) = Rs 15.00
Assessment Fee = Rs 61.00
Vend Fee = Rs 37.60
Total Tax Burden = Rs 117.35
Other indirect taxes
Excise Duty NA
VAT = Rs 70.92
Total Tax Burden = Rs 188.27
AD and relevant indirect taxes
Additional Duty (AD) = Rs 53.75
Vend Fee (BIO Rs 150/bottle) = Rs 150.00
Total Tax Burden = Rs 203.75
EAD and other indirect taxes
Extra Additional Duty (EAD)
268.75 x 4% = Rs 10.75
VAT = Rs 89.90
Total Tax Burden = Rs 295.40

Uttar Pradesh

The Uttar Pradesh Government has announced new excise policy for the year 2004-05. There is no increase in the prices of either country made or India-made foreign liquor in the policy. But some changes with regard to the fee structure and policy have been made. A fee of Rs. 1500 including processing fee has been fixed for every application and the whole sale annual licence fee for country made and foreign liquor has been fixed at Rs. 5 lakh. Also, the bar licence fee for all categories has been raised by Rs. 25,000.

The excise shops will be renewed and the shops which could not be renewed would be settled through public lottery. Excise Commissioner has been authorised to grant sanction for opening of new shops as per demand, but not more than ten per cent of the total number of currently existing shops. The restriction that a person cannot open more than two shops has been done away with in the new policy. The shops of foreign liquor have been kept in nine categories as before and their licence fee has been raised by 15 per cent. No increase has been made in excise duty on foreign liquor and its retail prices have been rationalized. With view to increasing revenue receipts, bottling fee for foreign liquor, wine import fee and beer export fee have been raised.

About 150 model wine shops would be opened in the State for sale of and serving IMFL, beer, draught beer, low-alcoholic brewages etc. Additional fee will be charged for serving wine, etc. in model wine shops. The model wine shops must be setup in a minimum carpet area of 6000 sq. feet in commercially approved areas. The shops must be fully air-conditioned with the facility of toilet.

State Tax Local Wines Tax BIO Wines
(EDP = Rs 215 per 75cl bottle) CIF = Rs 107.50/bottle; CIF + BCD @ 100% = Rs215;
AD @ 25% = 53.75; CIF + BCD + AD = 268.75; EAD @
4% = 10.75
Landed Cost (LC) (inc AD & EAD) = Rs 279.50/bottle
Uttar
Pradesh
Relevant indirect taxes
Import Fee Rs 4/BL
(wine from out of State only Rs2/75 cl) = Rs 2.00
Excise Duty (Rs 50/bottle or 25%
MRP, whichever higher) minimum = Rs 50.00
Total Tax Burden = Rs 52.00
Other indirect taxes
Sales Tax134 = Rs 90.27
Total Tax Burden = Rs 142.27
AD and relevant indirect taxes
Additional Duty (AD) = Rs 53.75
Import Permit Fee (foreign
wines Rs 100/bottle) = Rs 100.00
Total Tax Burden = Rs 153.75
EAD and other indirect taxes
Extra Additional Duty (EAD)
268.75 x 4% = Rs 10.75
Sales Tax = Rs 127.88
Total Tax Burden = Rs 292.38

Karnataka

Karnataka has a rule in place levying the same taxes on imported wines as domestic. The “Karnataka Grape Processing and Wine Policy – 2007” has been enforced with immediate effect (14-03-2007). The State Government has finally acknowledged the potential of the wine industry and is trying to exploit the impending benefits from it. To initiate the process the grape wine production units have been declared as the Horticultural and Food Processing Industries”. The government also proposes to set up two Wine Parks. All the incentives and facilities declared in the new Industrial Policy 2006-11 is also proposed to be provided to these wine parks. The government has suggested several new initiatives in order to bring about an overall change in the wine industry.

The entrepreneurs intending to establish wineries in Karnataka have been made eligible for getting such facilities. The Government would also encourage and assist the companies taking-up contract cultivation. Now the licenses to wineries will be issued at the district level and the concerned district Deputy Commissioners will be empowered to clear the license applications within 30 days of applying. Also, the licensed wineries will be allowed to sell the wines to those visitors who are interested to buy wines for self consumption.

The Government of Karnataka proposes to recommend the wineries for the 25% subsidy available to the Agriculture and Food Processing Units. The new Industrial Policy – 2006 extends a subsidy of 50% for the installation of grape processing units. An amount of Rs.5, 000 per annum will be charged as license fee for the sales of wine, and this fee will not be reviewed for the next 10 years. The State Government excise registration fee levied for the wineries is fixed at Rs.5, 000/- per annum. Sale of wine through wine-taverns, apart from sales at the point of production has been permitted. For this, a fee of Rs.2000 will be levied per annum. Further, permission is provided to undertake sale of wines in bottles in the bars, which have obtained license for the wholesale trade of wines.

The presently levied Additional Excise Duty is reduced to Rs. 2 per litre of the wine produced in the State. For the wine which is brought to Karnataka from other states this duty will be four fold. The Label Registration Fee is waived off for all the brands of wines, and this will not be reviewed for the next 5 years. A Grape Processing Industries Board will also be setup.

State Tax Local Wines Tax BIO Wines
(EDP = Rs 215/bottle) CIF = Rs 107.50/bottle; CIF + BCD @ 100% = Rs 215;
AD @ 25% = 53.75; CIF + BCD + AD = 268.75; EAD @
4% = 10.75
Landed Cost (inc AD & EAD) = Rs 279.50/bottle
Karnataka

Relevant indirect taxes
Excise Duty (Rs 4/BL) = Rs 3.00
Additional Duty (Rs 48/BL) = Rs 36.00
Total Tax Burden = Rs 39.00
Other indirect taxes
Import Fee (Rs 2/BL) NA
(imports from out of State)
Total Tax Burden = Rs 39.00

AD and relevant indirect taxes
Additional Duty (AD) = Rs 53.75
Special Fee (33% x (LC + 5% margin) = Rs 96.85
Litterage Fee (Rs 1/BL) = Rs 0.75
Total Tax Burden = Rs 151.35
EAD and other indirect taxes
Extra Additional Duty (EAD)
268.75 x 4% = Rs 10.75
Import Fee NA
Total Tax Burden = Rs 162.10

Kerala

The excise duty, import fee or luxury tax on liquor manufactured elsewhere in India and imported into the State by land, air or sea otherwise than under bond shall be equal to the duty to which such liquor manufactured in the State are liable under the Act such as import fee, excise duty or luxury tax namely:-

Kind of liquor Rate of Excise duty Rate of Luxury tax Rate of Import fee Rate of Export fee
Wine imported (duty paid or under Bond) Rs.2 per bulk litre
Indian Made Foreign Liquor excluding beer and wine An amount equal to 100 % of its value
Beer
(a)Wine
Rs.3 per Bulk litre
Medicated wine and similar preparations but not including preparations on which duty is leviable under the Medicinal and Toilet Preparations (Excise Duties) Act.1955 Rs.12 (Rupees twelve only) per proof litre.

Orissa

According to the Excise Policy for the year 2005-06, Government after careful consideration has been pleased to decide that the excise shops and establishments may be settled during the year 2005-06 in the manner indicated below:-

  • Annual Licence Fee for Wine Producing Units – Rs. 1.00 Lakh
  • The Distilleries, Breweries and Bottling units will pay the licence fee for Item-1 above.
  • The Breweries, Bottling units and Distilleries having bottling units will pay the licence fee for bottling according to Item-II above.
  • The Distilleries and Bottling units having ENA Columns will pay the licence fee for having ENA Columns according to Item-III above.
Type Strength Excise Duty
Wine imported in bulk and bottled in India 120. 2- 36.80 Rs. 150/- per LPL
India made Wine 400 Rs. 40/- per LPL

Fees for Label Registration, Import and Export of IMFL / Beer, Rectified Spirit and Denatured Spirit, Franchise Fee for IMFL, Privilege Fee and Vend Fee etc.

Label Registration Fee
Foreign Liquor/Wine/Beer (Imported from beyond Custom barrier) Rs.15,000/- per label per annum
Vend fee on foreign liquor imported into India from outside the Country (Not bottled in India) Rs.200/- per LPL

Model Wine ‘Off’ and ‘On’ shops will be allowed in 6 major cities of the state namely, Cuttack, Puri, Bhubaneshwar, Sambalpur, Rourkela and Berhampur on payment of requisite charges / fees to be prescribed by the Government which should not be less than Rs 1.50 lakh.

Punjab

State

Tax Local Wines Tax BIO Wines
(EDP = Rs 215 per 75cl bottle) CIF = Rs 107.50/bottle; CIF + BCD @ 100% = Rs215;
AD @ 25% = 53.75; CIF + BCD + AD = 268.75; EAD @
4% = 10.75
Landed Cost (LC) (inc AD & EAD) = Rs 279.50/bottle
Punjab Relevant indirect taxes
Excise Duty (Rs 4PL) = Rs 3.00
Total Tax Burden = Rs 3.00
Other indirect taxes
Import Fee (Rs 1/BL) = Rs 0.75
Additional/Special Duty (Rs 4/PL) = NA
Tax Dept Dev Fee (Rs 1/PL) = Rs 0.17
Sales Tax (VAT) = Rs 9.07
Total Tax Burden = Rs 12.99
AD and relevant indirect taxes
Additional Duty (AD) = Rs 53.75
Total Tax Burden = Rs 53.75
EAD and other indirect taxes
Extra Additional Duty (EAD)
268.75 x 4% = Rs 10.75
Import Fee (Rs 1/BL) = Rs 0.75
Additional/Special Duty (Rs 4/PL) = NA
Tax Dept Dev Fee (Rs 1/PL) = Rs 0.17
Sales Tax (VAT) = Rs 11.78
Total Tax Burden = Rs 77.20

Haryana

Keeping pace with the developments taking place in other states of India, Haryana is trying hard to have a major bulk of the growing wine market to be in its state. Consequently, Haryana Cabinet approved the State’ excise policy for 2007-08. It allows selling wine in the departmental stores located in shopping malls in cities. It also reduces the excise duty to Rs.20.50 per proof litre from Rs.32.25 per proof litre. In addition to that Haryana reduces the export duty to 50% for the domestic industry.

Chandigarh

The Excise Policy of Chandigarh for the year 2007-08 has come up with great surprises for the Wine industry. The government can impose Excise Duty on the liquor manufactured and consumed in a state in any one of the following manner:

Specific duty based on alcohol content (on a proof litre basis)

Ad-valorem duty based on Ex-factory price

Ad-valorem duty based on minimum retail price

In Chandigarh excise duty is imposed on basis of alcohol content. The licence fee and brand registration fees for Beer and Wine have been kept low to introduce more varieties in the UT. Same was made applicable to beer and wine pubs. Wholesale licences of Beer, IMFL, Wine, etc were granted to only manufacturing distilleries/breweries/wineries, etc. The proposal for the year 2007-08 has several new developments. In order to encourage responsible drinking habits and to create an environment where consumption of alcohol is subject to regulation, a Bar-code will be encouraged on all brands of IMFL, Beer, Wine, RTD and Country Liquor.

Sale of IMFL, Wine and Beer on Departmental Stores: Retail sale licence L-2 shall be granted to departmental stores also. These licences will be free to stock and sell non-alcohol items also. As regards the fixation of wholesale rates, department will not fix the rates but will intervene in case of abnormal increase in price by any wholesale licensee. The licence fee for Pubs, (Retail vend of Bottled/Drought Beer and Wine for consumption on the premises) is proposed to be slashed to promote the consumption of low alcoholic content drink such as wine and beer.

The assessed fee on Wine and Beer sold in Bars and Departmental Stores is also proposed to be slashed to bring down the prices of these products. Duty on Wine, Champagne, Cider, RTD and Liquors, the Duty on Wine supplied to troops, assessed fee on Liquor supplied to Troops/Military Canteen and Additional Licence fee on imported Wine (BOI) have been duly changed. Wholesale Licence of Wine manufactured/ bottled in India is granted to only those companies having their manufacturing distilleries/bottling plants, breweries and wineries.

Import fee on Wine is fixed @ Rs 3/- per case of 9 BL. The Registration Fees for the approvals of liquor brands for sale in Chandigarh be charged as Rs 1, 000 per Brand. The Licence fee of Retail vend of Wine for consumption on the premises is fixed based on several categories. Assessed Fee on liquor sold in Bar is also proposed to be slashed for Wine sold through Bars. The L-10B Licences for the wine imported only from outside India. The quantity of purchase and possession of Wine by an individual has been fixed as 18 bottles of 750 ML. The possession of liquor by L-50 Permit Fee alongwith fee is fixed as: 36 bottles of 750 ML FOR Rs 200/- for a year or part thereof or Rs 2, 000/- for lifetime.

State Tax Local Wines Tax BIO Wines
(EDP = Rs 215/bottle)
CIF = Rs 107.50/bottle; CIF + BCD @ 100% = 215;
AD @ 25% = 53.75; CIF + BCD + AD = 268.75; EAD @
4% = 10.75.
Landed Cost (inc AD & EAD) = Rs 279.50/bottle
Andhra Pradesh Relevant indirect taxes:
None
Total Tax Burden = Rs 0.00
Other indirect taxes
Import Fee (Rs 2/BL) = Rs 1.50
Excise Duty (Rs 80/PL) = Rs 13.66
EAL Fee (Rs 0.10/bottle) = Rs 0.10
Special Privilege Fee
(10% of basic price, est. Rs 230) = Rs 23.00
VAT (70% of cost to APBCL
= basic price + 20% margin) = Rs 193.20
Total Tax Burden = Rs 231.46
AD and relevant indirect taxes:
Additional Duty (AD) = Rs 53.75
Total Tax Burden = Rs 53.75
EAD and other indirect taxes
EAD (268.75 x 4%) = Rs 10.75
Import Fee (Rs 2/BL) = Rs 1.50
Excise Duty (Rs 80/PL) = Rs 13.66
EAL Fee (Rs 0.10/bottle) = Rs 0.10
Special Privilege Fee
(10% of basic price est. Rs 300) = Rs 30.00
VAT (70% of cost to APBCL
= basic price + 20% margin) = Rs 252.00
Total Tax Burden = Rs 351.76

State Tax Local Wines Tax BIO Wines
(EDP = Rs 215/bottle) CIF = Rs 107.50/bottle; CIF + BCD @ 100% = 215;
AD @ 25% = 53.75; CIF + BCD + AD = 268.75; EAD @
4% = 10.75.
Landed Cost (inc AD & EAD) = Rs 279.50/bottle
Assam Relevant indirect taxes
Transport Fee (Rs 30/case) [or
Import Fee if from out
of State (Rs 90)] = Rs 7.50
Excise Duty (Rs 5/BL) = Rs 3.75
Total Tax Burden = Rs 11.25
Other indirect taxes
Availability Fee (Rs 7/case) = Rs 0.58
Litterage/Gallonage Fee (Rs 6.BL) = Rs 4.50
VAT = Rs 58.10
Total Tax Burden = Rs 74.43
AD and relevant indirect taxes
Additional Duty (AD) = Rs 53.75
Import Permit Fee (whisky Rs = Rs 41.67
800/case, vodka, gin, brandy,
rum Rs 600, wine Rs 500)
Total Tax Burden = Rs 95.42
EAD and other indirect taxes
Extra Additional Duty (EAD)
4% x 268.75 = Rs 10.75
Availability Fee (Rs 7/case) = Rs 0.58
Litterage/Gallonage Fee (Rs 6.BL) = Rs 4.50
VAT = Rs 78.88
Total Tax Burden = Rs 190.13

State Tax Local Wines Tax BIO Wines
(EDP = Rs 215/bottle) CIF = Rs 107.50/bottle; CIF + BCD @ 100% = Rs 215;
AD @ 25% = 53.75; CIF + BCD + AD = 268.75; EAD @
4% = 10.75
Landed Cost (inc AD & EAD) = Rs 279.50/bottle
Goa Relevant indirect taxes
Excise Duty (Rs 6/BL) = Rs 4.50
Total Tax Burden = Rs 4.50
Other indirect taxes
Import Permit Fee (Rs 200/permit) NA
(IMFL from out of State only)
Special Duty (Health Charge)
(2% ED + Licence Fee, estimated at Rs 1) = Rs 1.00
Library Cess (Rs 0.5/BL) = Rs 0.38
VAT = Rs 55.63
Total Tax Burden = Rs 61.51
AD and relevant indirect taxes
Additional Duty (AD) = Rs 53.75
Import Permit Fee (Rs 20BL) = Rs 15.00
Total Tax Burden = Rs 68.75
EAD and other indirect taxes
Extra Additional Duty (EAD)
268.75 x 4% = Rs 10.75
Special Duty (Health Charge)
(2% ED + Licence Fee, estimated at Rs 1) = Rs 1.00
Library Cess (Rs 0.5/BL) = Rs 0.38
VAT = Rs 77.72
Total Tax Burden = Rs 158.60
State Tax Local Wines Tax BIO Wines
(EDP = Rs 215 per 75cl bottle) CIF = Rs 107.50/bottle; CIF + BCD @ 100% = Rs215;
AD @ 25% = 53.75; CIF + BCD + AD = 268.75; EAD @
4% = 10.75
Landed Cost (LC) (inc AD & EAD) = Rs 279.50/bottle
Rajasthan Relevant indirect taxes
Import Fee (Rs 5/PL)
(products from out of State only) = Rs 0.85
Excise Duty (Rs 350/PL) = Rs 59.78
Total Tax Burden = Rs 60.63
Other indirect taxes
Sales Tax = NA
Total Tax Burden = Rs 60.63
AD and relevant indirect taxes
Additional Duty (AD) = Rs 53.75
Sales Tax = Rs
61.63
Total Tax Burden = Rs 115.38
EAD and other indirect taxes
Extra Additional Duty (EAD)
268.75 x 4% = Rs 10.75
Import Fee (NA to BIO) NA
Total Tax Burden = Rs 126.13
State Tax Local Wines Tax BIO Wines
(EDP = Rs 215 per 75cl bottle) CIF = Rs 107.50/bottle; CIF + BCD @ 100% = Rs215;
AD @ 25% = 53.75; CIF + BCD + AD = 268.75; EAD @
4% = 10.75
Landed Cost (LC) (inc AD & EAD) = Rs 279.50/bottle
West Bengal Relevant indirect taxes
Excise Duty (Rs 150 PL) = Rs 25.62
Import Pass Fee (Rs 7/BL
wines from out of state) 5.25
Total Tax Burden = Rs 30.78
Other indirect taxes
Sales Tax = Rs 73.73
Total Tax Burden = Rs 104.51
AD and relevant indirect taxes
Additional Duty (AD) = Rs 53.75
Import Pass Fee (Rs 332/BL) = Rs 249.00
Total Tax Burden = Rs 302.75
EAD and other indirect taxes
Extra Additional Duty (EAD)
268.75 x 4% = Rs 10.75
Sales Tax = Rs 158.55
Total Tax Burden = Rs 472.05

N.B.

* It should be noted that the calculations concerning details of excise duty and other related taxes of various states relate to equally priced imported BIO wines/Indian wines and equally priced imported BIO spirit/Indian spirits (EDP of Indian product = CIF value + BCD of imported product). Moreover the prices mentioned are representative of products imported into India from the EU in the three year period preceding the year 2006 (wines C.I.F value of 30 USD/case = Rs 143.33 per 75 cl bottle; spirits C.I.F value of 40 USD/case = Rs 143.33 per 75 cl bottle).

* It is to be further noted that as regards wines, an Additional Duty rate of 25% ad valorem has been used for the purposes of the calculations, since this equals the rate by which the Additional Duty as applied to products in the relevant price category (50% ad valorem) exceeds the bound rate of customs duty set forth in India’s tariff schedule.

* The calculations are based on old data and in some case the duties and taxes have not been changed but in most cases it has been duly altered. Before relying completely on the data above do seek professional advice.

* The following explanations and glossary of terms are intended to clarify the information contained in the details of the above report, especially while calculating the details of taxation and the like:

Bottle The term bottle is used to describe a bottle of 750 milliliters.
Bulk Litre (BL) The term bulk litre is used to describe a litre of liquid irrespective of its alcoholic strength.
Case A case, often described as a 9 litre case, is a carton containing 12 standard size (750ml) bottles, giving a total of 9 liquid litres. Internal taxes are often levied in Rs per case.
Declared Manufacturing Cost In the State of Maharashtra the declared manufacturing cost is used as the basis for applying a (200% ad valorem) excise duty. This cost is invariably below the EDP in order to minimize liability for tax. However, because the declared manufacturing cost is directly linked to the MRP fixed by the Government of Maharashtra, producers must strike a balance between reducing their tax liability and positioning their brands at an appropriate price point in the market.
EDP Ex distillery price or the price at the distillery gate, i.e. the first point of sale Import Fee A number of Indian States applies Import Fees to the importation of Indian wines and spirits from other Indian States. These are included in the calculations in this Annex only for States in which there is no local production of wines and spirits respectively.
Landed Cost (LC) Cost, including all applicable duties, at a particular point (usually to the importer/distributor) in the distribution chain. In the case of BIO products the landed cost includes the Basic Customs Duty (BCD), the Additional Duty (AD), and the Extra Additional Duty (EAD).
Pint A pint is 375ml.
Proof Litre (PL) and these terms are used interchangeably and describe a litre of spirits at London Proof Litre (LPL) 57.1% alcohol by volume (% Vol).
Quart A quart is two pints or 750 ml.
Rs Indian Rupees For the purpose of calculating Basic Customs Duty, Additional Duty and Extra Additional Duty an exchange rate of Rs 43 per US Dollar is used.
Rs/BL Certain States apply excise duties on the basis of the volume of liquid (volume specific or unitary taxation), where the rates are expressed in terms of Rupees per (bulk) litre of spirit. Since the standard bottle size in India is 750ml, the tax rate must be multiplied by 0.75 to determine the amount of tax payable.
Rs/PL and Rs/LPL Many Indian States apply excise duties and other internal taxes on the basis of alcohol content (alcohol specific taxation), where the rates are expressed in terms of Rupees (Rs) per litre of spirit at full ‘proof’ of 57.1% vol. Since the standard bottle size in India is 750ml and the standard bottling strength is 42.8% Vol, the tax rate must be multiplied by 0.5625 to determine the amount of tax payable.

Comment

The policies concerning several states are not clear and serious objections have been raised by EU in all these cases:

  • There are serious indications that some of these States, notably Bihar, Daman & Diu, Jharkhand, Tamil Nadu and Uttaranchal, either prohibit or restrict importation and sale of BIO wines and spirits.
  • Jharkhand, Tamil Nadu and Uttaranchal, either prohibit or restrict importation and sale of BIO wines and spirits.
  • It is to note that these are the Prohibition States: Gujarat, Lakshadweep, Mizoram, Nagaland and Manipur.

Disclaimer: This document is a copyright of Seth Associates. No reader should act on the basis of any statement contained herein without seeking professional advice. The authors and the firm expressly disclaim all and any liability to any person who has read this report, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this report.