In a significant move aimed at curbing cross-border liquor purchases and boosting state revenue, the Jharkhand government is preparing to drastically reduce the Value Added Tax (VAT) on alcohol. With the implementation of the state’s new excise policy, liquor prices in Jharkhand are expected to drop notably.
At present, Jharkhand imposes a hefty 75% VAT on liquor, making it one of the most heavily taxed commodities in the state. This high taxation has led many consumers to purchase alcohol from neighboring states like West Bengal and Chhattisgarh, where the VAT on liquor is considerably lower. This practice not only affects local businesses but also causes a significant loss to the state’s revenue.
To counter this issue, the government is now planning to slash the VAT rate on liquor from the existing 75% to just 5%. Excise and Prohibition Minister Yogendra Prasad stated that this decision is being taken to bring Jharkhand in line with its neighboring states and to stop the outflow of potential tax income. “The discrepancy in liquor prices is causing economic harm to our state, and we aim to correct that with this new policy,” said the minister.
The draft of the new excise policy has already received the nod from the concerned minister and is currently under review by the Revenue Council, Finance Department, and Law Department. While the Finance Department has sought further clarifications on some provisions of the proposed policy, officials remain optimistic about a timely rollout.
If all goes according to plan, the new excise policy is likely to come into effect from June 1. This means consumers could see a sharp decline in liquor prices starting from June itself, offering them a legal and affordable option to purchase alcohol within the state.
Another major reform under the proposed policy is the allocation of retail liquor licenses. Unlike previous methods, the new system will rely on an e-lottery process to ensure transparency and efficiency. The software for this lottery system has been developed by the National Informatics Centre (NIC) and is currently undergoing testing.
To facilitate the testing process, committees have been formed at both the headquarters and regional excise office levels. These committees have already started evaluating the software’s performance to ensure its smooth operation once the new system is live.
Overall, the new excise policy marks a significant shift in how Jharkhand manages its liquor trade. By reducing VAT and modernizing the licensing process, the government hopes to strike a balance between consumer affordability, state revenue generation, and curbing illegal or cross-border liquor trade. If successful, this move could serve as a model for other states grappling with similar issues.
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