Union Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2021-22 on Monday, announced imposition of Agriculture Infrastructure and Development Cess (AIDC) on specific goods, such as alcoholic beverages, gold, silver, cotton, peas, apple, petrol, and diesel. The FM also proposed agricultural infrastructure cess of 100 per cent on all alcoholic beverages. The cess will be applicable from February 2, 2021, said the finance minister.
So what does it mean in terms of liquor prices? Will they rise and if yes, by how much? According to experts, alcohol prices will not increase due to 100 per cent agri infra cess. They say the price of imported alcohol won’t be affected because of the change in the composition structure.
Though agri cess of 100 per cent has been levied on some alcoholic beverages, the corresponding basic customs duty has been reduced from 150 per cent to 50 per cent. As a result, the net effective rate of import duties remains at 150 per cent, thus having no impact on overall prices of liquor.
“To benefit farmers, we are raising customs duty on cotton from nil to 10 per cent and on raw silk and silk yarn from 10 per cent to 15 per cent. We are also withdrawing end-use based concession on denatured ethyl alcohol. Currently, rates are being uniformly calibrated to 15 per cent on items like maize bran, rice bran oil cake, and animal feed additives,” a statement by the government said.
A 100 per cent cess will also be imposed on other fermented beverages for example, Cider, Perry, Mead, sake, mixture of fermented beverages or fermented beverages and nonalcoholic beverages.
“To ensure the imposition of cess does not lead to additional burden in most of these items on the consumer, the basic customs duty (BCD) rates has been lowered. This cess shall be used to finance the improvement of agriculture infrastructure and other development expenditure,” the Finance Ministry said in a statement.
Budget 2021 also proposed an AIDC of Rs 2.5 per litre on petrol and Rs 4 on diesel. But rates of petrol and diesel will not change either because of reduction in other duties. Cess was also applied on gold and silver bars, crude palm oil, crude soybean, apples and peas.