Excise duty on liquor is an important revenue source for states all across India, especially the one's which are developing. The Telangana State Government collected Rs.5772 Cr in the calendar year 2016-17. The government in the next calendar year 2017-18 started to add Value Added Tax (VAT) on liquor sales which boosted the revenue to collect a whooping total of Rs.14,244 Cr. In the next consecutive calendar year 2018-19 the government went on to collect Rs.14,092 Cr (VAT Included).
But the question is,''How did the government manage to increase its excise revenue by almost 40%?'' with same amount of sales happening in the past few years. Same amount of liquor stock are produced and sold in the last two years but there is a steady rise in the revenue collected by the government. In the calendar year:
2017-18 -- 2.66 Cr cases of liquor
3.70 Cr beer cartons were sold.
2018-19 -- 2.71 Cr cases of liquor
3.36 Cr beer cartons were sold.
The reasons for such spike in the revenue is firstly due to the increase of the pricing on both liquor and beer. Secondly, the prohibition wing are making certain that duty free liquor sold at airports are not being sold outside for the commercial rates.
As you know, even the government should buy liquor from someone to sell. But, how much do you think the government buys the product from them? It costs around Rs.15 to Rs.20 for beer to be manufactured and government then buys it for around Rs.30 to Rs.35, and sells it for Rs.100 to 150 depending upon the size and ml of the bottle. Same is in the case of liquor too. They buy them for such cheap rates and sell it to public for high prices. One can clearly have a view over what actually is happening. This is the preeminent reason behind the spike in the revenue collection from the excise department.
Many state governments increased the price on beer and liquor in the lockdown, almost doubling and tripling the prices. Imagine how much revenue the government could have earned from the excise department this year? Anually, the Government of India earns a gigantic amount of Rs. 2.48 trillion over Excise Department, 700 Cr per day. It is estimated that the government of Telangana upon increasing the prices, is going to collect Rs.20,174 Cr this year.