In a notification released by the finance department, the VAT rate for permit room liquor services is doubled to 10 per cent, reported Times of India.

According to industry sources, rise in VAT on liquor can have some repercussions for customers and indirectly impact law and order situation in the state. Expensive alcohol will encourage drinkers to resort to other affordable alternatives like off-premise consumption. With increase in VAT, more people would prefer drinking on building terraces, parks, beaches or parked vehicles, reported TOI.

Shift in consumer behaviour might bring more challenges for the administration. In another move, the government is also planning to bring a new excise policy that links pricing to the alcohol content of beverages and permits the sale of bottled liquors in bars and permit rooms, reported Free Press Journal.

Till now there has been no information about the timeline of the implementation of this excise policy. The decision is expected to reduce beer prices, but its main intention is to boost revenue.

Liquor has always been seen as a major source of revenue for the government. Last month, the Goods and Services Tax (GST) department in Mumbai had proposed a hike in the tax on liquor served in restaurants and hotels below 3 stars, reported Hindustan Times. The tax was suggested to be implemented in restaurants and hotels below 3 stars, from 5% to 10-15%. The move would help the government in increasing the revenue by ₹300 to ₹600 crore annually. Other than liquor, the department had also proposed to increase tax on gold and gold jewellery, as well as uniformity in tax on fabric and readymade garments.

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Updated: 22 Oct 2023, 04:03 PM IST