The state government has to pay 18% of its license fee as GST to the Centre, which would result in a huge revenue loss.

To dodge GST on license fee for bars Andhra changes excise policyFile photo: PTI
news GST Sunday, June 25, 2017 - 09:03

In what seems like a move to avoid paying Goods and Service Tax (GST) to the Centre on bar licence fee, the Andhra Pradesh government introduced a new bar policy this week. 

According to reports, the state issued a Government Order only on Friday that also made licenses valid for five years instead of one, setting the license fee at Rs 2 lakh, and the registration fee as high as Rs 28 lakh.

The Deccan Chronicle reported that the state government has to pay 18% of its license fee as GST to the Centre, which would result in a huge revenue loss.

The DC report adds that the Andhra government plans to bypass this and reduced the license fee to Rs 2 lakh, while increasing the registration fee, to vary between Rs 8 lakh to Rs 28 lakh. 

The New Indian Express reported that Andhra was in fact, looking to rake in more revenue from liquor, and stated that a cabinet meeting on June 15 saw a discussion to issue licences for micro- breweries, star hotels, tourism centres, beer and liquor parlours, beach shacks and resorts.

The state government is already under a fund crunch, with Finance Minister Yanamala Ramakrishnudu recently saying that the state's financial condition was under 'stress', in the first quarter of the financial year.

"If we want to control the parameters, either GSDP should increase, or revenue should increase, or overall expenditure should be cut down. Neither is happening," he had said.

Keeping this in mind, it would seem likely that the Andhra government would take steps to increase its revenue.

In April this year, the state said that it witnessed a revenue growth rate of 9.81% for the financial year of 2016-17, and added that it had officially generated Rs 46,285.30 crore, via its seven revenue earning departments.

The state's Prohibition and Excise department had achieved a growth rate of 5.88% in 2016-17, by earning Rs 4,644.45 crore.

Show us some love and support our journalism by becoming a TNM Member - Click here.