Shimla: The Himachal cabinet today lowered VAT on liquor while approving the excise policy for 2008 â€“ 09 so as to check smuggling because of the high differential in taxes imposed by the neighboring states.
Briefing media persons after holding the cabinet meeting at Dharmashala, chief secretary Ravi Dhingra said that the cabinet noted that against a VAT rate of 20 percent applied by Himachal, the states of Haryana, Punjab and Chandigarh were only imposing a rate of 4 percent, which was resulting in smuggling and a heavy revenue loss to the state.
The cabinet decided to follow a middle path and it was decided to reduce VAT from 20 % to 12.5 %. It was also decided to reduce the license fee on Indian Made Foreign Liquor (IMFL) from Rs 160 to Rs 125 and on country liquor from Rs 130 to Rs 95 per proof liter. These measures would reduce the price per bottle of IMFL and Country liquor by Rs 23 and Rs 15, he said.
The cabinet also decided to continue with the individual vend / unit based applications system for allotment of retail vends in the state. It was also agreed that existing retail licensee holders who commit themselves to the new conditions of license fee and other levies would be given an option to apply for renewal. This system had been preferred as the number of people employed in the trade has gone up to 625 where as earlier it was monolplized by 25 persons only, said Dhingra.
The cabinet also decided to reserve 20 % of quota of country liquor for General Industry Corporation, a state public sector undertaking.
The excise department projected an increase of 10 â€“ 12 % in excise revenue, which was expected to touch Rs 402 crore in 2008-09 against a Rs 360 crore projection for the current year.