Alcohol prices

Alcohol prices will not rise due to 100% agro-infrastructure: experts

Union Finance Minister Nirmala Sitharaman, in her 2021 budget speech, announced the imposition of the Agricultural Infrastructure and Development Tax (AIDC) on specific goods, including alcoholic beverages, gold, silver, cotton, peas, apple, gasoline and diesel.

A 100% agricultural infrastructure CES has been offered on alcoholic beverages, while on gold, silver and gold bullion it is 2.5%. For apples it’s 35 percent, while for cotton it’s 5 percent each. The cess has been imposed on all alcoholic products (Brandy, Bourbon, whiskey, Scotch, etc.)

Experts say that the prices of imported alcoholic products will remain unchanged due to the change in the structure of the composition.

“For imported spirits and wines with an alcoholic strength of less than 80%, the basic customs duty has been reduced from 150% to 50% while the tax on agricultural infrastructure and development (AIDC) is imposed on 100% on the same value. The net effective import duty rate remains at 150% and there will be no negative impact on the industry, ”said Darshan Bora, Partner, ELP.

A 100% cease will also be imposed on other fermented drinks such as, for example, cider, perry, mead, sake, mixtures of fermented drinks or fermented drinks and non-alcoholic drinks.

“The AIDC was imposed for the purpose of financing agricultural infrastructure and other development spending. For alcohol, it has been proposed at 100% with a reduction in the basic tariffs to 50% instead of 150%. This is for imported alcohol and the effort seems to be to affect the money raised, especially for the above financing needs without affecting the overall pricing, ”said Shashi Mathews, Partner, IndusLaw.

“To ensure that the imposition of the tax does not result in an additional burden for most of these items on the consumer, the base rates of customs duty (BCD) have been lowered. This tax will be used to finance the improvement of agricultural infrastructure and other development spending. “, said the Ministry of Finance in a statement.

The Agri Infra Development Cess will be applicable from February 2, 2021, Sitharam said.

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