At ₹31,517 cr, Uttar Pradesh's excise revenue highest in country: RBI

Tamil Nadu may have the reputation for earning crores by selling liquor, but the latest Reserve Bank of India data show that it is Uttar Pradesh which gets the maximum excise revenue in the country.

UP gets around ₹31,500 crore as excise revenue. which is 21.8 per cent of its own-tax revenue. Tamil Nadu gets ₹7,262.30 crore, which is just 5.8 per cent of its own-tax revenue. Karnataka has the second largest excise revenue of ₹20,950 crore.

Also read: TN’s first-quarter revenue at 23.7% of FY23 budget revenue expectation

The own-tax revenue mostly consists of liquor sales as well as land registration and stamp duty. The rest of the taxes are subsumed by GST. Hence, higher excise duties are an indicator of higher revenue from liquor sales.

New excise policy
“UP has a new excise policy which is aimed at augmenting the financial resources of the state by regulating and controlling the manufacture, transport, import, export, sale and possession of quality liquor,” said an additional chief secretary of the Tamil Nadu government, explaining UP’s substantial excise revenues. “Besides, the new policy aims at providing liquor at reasonable prices, attracting investment and transforming UP into a self-sustainable producing state,” he told The Federal.

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The policy also had the objective of increasing farmer’s income by protecting crops from being destroyed and creating employment opportunities. To educate citizens regarding responsible drinking, a special drive will be conducted with a budget of ₹1 crore allocated for such activities, said the official.

In Tamil Nadu, the excise revenue is not at par with what UP gets. In the first quarter, ₹2,594.55 crore was received from this source, which was 24.5 per cent of the total revenue expected for 2022-23. In the first quarter of FY22, excise duties contributed only 12.47 per cent of the total budget revenue expectation. The primary source of this income is liquor sale.

VAT (value added tax) revenue was ₹13,11,924 crore in the first quarter, 22.93 per cent of the budget revenue expectation. VAT revenue, however, has seen a huge jump this year compared to last year, when the source contributed just 16.62 per cent of the budget revenue expectation.

“We cannot compare UP and Tamil Nadu with regard to excise revenue. In UP, the number of liquor shops, population as well as the area is very big and therefore the excise revenue is high. But the percentage of its own-tax revenue shows that the government is dependent more on excise revenue compared to other sources of revenue,” said the additional chief secretary.

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“Our excise revenue used to be more when the Centre was sharing excise revenue collected from fuel sales. But after 2014, excise collection from fuel sales has been declining. As the Centre started to levy cess on fuel sales, the excise revenue source was much less. The cess collected on fuel sales is not shareable with states,” said the official.