The most ambitious Delhi’s Alcohol Policy 2021-22 which brought in big discounts for consumers was scrapped on July 31 amid allegations of corruption and irregularities in the drafting and implementation of the policy.

After scrapping the new policy, the Delhi government decided to bring back the ‘old excise regime’ that was in force before.

Definitely! We shall not nit-pick the old vs. new policy. Let us generally understand how alcohol is regulated in India.

Alcohol laws of India: A backgrounder

• The legal drinking age in India and the laws which regulate the sale and consumption of alcohol vary significantly from state to state.
• In India, consumption of alcohol is prohibited in the states of Bihar, Gujarat, Nagaland and Mizoram.
• There is partial ban on alcohol in some districts of Manipur.
• All other Indian states permit alcohol consumption but fix a legal drinking age, which ranges at different ages per region.
• In some states the legal drinking age can be different for different types of alcoholic beverage.

Regulation

• Alcohol is a subject in the State List under the Seventh Schedule of the Constitution of India.
• Therefore, the laws governing alcohol vary from state to state.
• Liquor in India is generally sold at liquor stores, restaurants, hotels, bars, pubs, clubs and discos but not online.
• Some states, like Kerala and Tamil Nadu, prohibit private parties from owning liquor stores making the state government the sole retailer of alcohol in those states.
• In some states, liquor may be sold at groceries, departmental stores, banquet halls and/or farm houses.
• Some tourist areas have special laws allowing the sale of alcohol on beaches and houseboats.

Drunk driving law

• The blood alcohol content (BAC) legal limit is 0.03% or 0.03 mg alcohol in 100 ml blood.
• On 1 March 2012, the Union Cabinet approved proposed changes to the Motor Vehicle Act.
• Higher penalties were introduced, including fines from ₹2,000 to ₹10,000 and imprisonment from 6 months to 4 years.
• Different penalties are assessed depending on the blood alcohol content at the time of the offence.

Dry days

• Dry days are specific days when the sale of alcohol is not permitted.
• Most of the Indian states observe these days on major national festivals/occasions such as Republic Day (26 January), Independence Day (15 August) and Gandhi Jayanti (2 October).
• Dry days are also observed during elections in India.

Taxation on Alcohol

• Most states levy either Value added Tax (VAT) or Excise duty or both.
• Excise duty is a tax levied to discourage the consumption of a product.
• It is calculated on a per-unit basis. Meaning, if you buy 1 litre of liquor, you pay a fixed excise duty of Rs 15.
• Value-added Tax is charged in the proportion of the product. If a bottle costs Rs 100, and the state levies 10 percent VAT, the price rises to Rs 110.

Tax rates in States

• The 29 states/UTs in India approach liquor taxation differently.
• For instance, Gujarat has banned its citizens from consuming liquor since 1961.
• But outsiders with special licenses can still buy.
• Puducherry, on the other hand, earns most of its revenue from alcohol trading.
• Bihar has prohibited alcohol consumption entirely, meaning the state’s revenue from liquor consumption is nil.
• Its neighbour, Uttar Pradesh, earns the most excise duty on liquor.
• The state does not levy VAT but a special duty on liquor, collecting funds for particular purposes.

Do you know?

Andhra Pradesh, Telangana, Kerala, Karnataka, and Tamil Nadu consume as much as 45 percent of the liquor sold in the country.

Nationally, Maharashtra charges the highest rate but draws only a portion of its revenue from its sales.

Why alcohol isn’t banned everywhere?

• Taxes from alcohol sales roughly form a quarter of state revenues.
• If this stream suddenly stops, states have to compulsorily cut some important spending.
• Also, moderate alcohol consumption may provide some health benefits.

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