Ashu Ratan Khare, Director, Rock and Storm Distilleries Pvt. Ltd

I think this budget will be different from all previous Budgets. It comes at a time when the country has been fighting a pandemic. Revival Push is the key expectation from the Union Budget of 2021.

A) Tax Benefits (WRT, Liquor Industry and Retail Industry)

Liquor Industry

Indirect taxation on the Liquor Industry comes under the purview of State Government. Hence it will not come under the purview of Union Budget 2021.

Central Government influences the customs duty on import of scotch. The liquor industry faces high % of customs duty on importing scotch, which is being used for the premiumization of Indian whiskeys as the main component. We would request the Finance Minister to reduce the customs duty on import of scotch from 150% to a reasonable value so that quality product can reach to the consumers. 

 Retail Industry

We hope that the budget 2021 will bring forward a lot of hope for the entire retail sector in terms of tax reforms, job creation and the development of a strong supply chain and ease of doing business. 

Additionally, the reduction in income tax will prove beneficial for the taxpayer consumer base which in turn will lead to improved sales in the retail market.

Budget 2021 could go a long the way towards meeting this goal by way of introducing tax reforms such as enhancing –

Repayment of the principal amount deduction limit on home loans under Section 80C of the IT Act, 1961;

·  Lowering the long-term gains tax for the sale of house property and

·  Rationalizing the GST for under-construction properties.

·  Higher deduction in taxable income can be expected on account of increased health expenses during the pandemic.

·  Some relief in the form of tax benefit under Section 80D of the Income Tax Act is expected.

·  Limit under Section 80C should be increased to Rs 3 lakh

·  More tax deductions for CSR and Individual donations through tax benefits u/s 80G of IT Act, 1961 so that participation of the taxpayer will increase in social work like health sector after COVID19. 

All such tax reforms will increase disposable the income of consumers hence in turn retail sale will increase which will boost the retail business. 

B) Ease of Doing Business for the MSME Sector

The year 2020 was the most traumatic year of our life. It has ravaged economies across the globe. MSMEs have borne the maximum loss. While some had to close their businesses, several organizations reduced employment or cut its employees’ salary. Despite the several efforts, many MSMEs failed due to funding crunch, tax burden, rigid compliances, and poor technological development. To cope with this, we expect from budget 2021 to focus on enabling the development of MSMEs by providing them access to easy credit/loan on the competitive rate of interest, reducing income tax rate & GST tax rate, and offering rebates to MSMEs willing to adopt new technologies.

The single-window clearance for MSMEs, projects must be started nationwide.

C) Ease of Policy Norms in Trading Liquor

The biggest challenge for our industry is the hypocrisy of governments. They like the revenue from the alcohol industry but will not make reasonable laws for easy of business and to administer the industry well.

We need to have a pragmatic approach to the alcohol industry in India and administer it well to curb irresponsible and illicit consumption of liquor.

However, we would urge the Finance Minister to take out the Liquor Business from the ambit of State Government and take it in GST purview which will help us to get an input tax credit and reduce our cost of production. Moreover, once Liquor Business comes under GST purview Liquor, The industry will be governed through uniform policy across the nation and will curb malpractices in the industry.

D) Any additional point you would like to comment on the Liquor Industry

· The government must evolve a system to curb illicit liquor.

· Nation wise uniform policy for the liquor industry.

· Liquor business should come under GST purview.

2) Rohan Khare, CEO & Founder of Bad Monkey Beverages

With expected GDP contraction of over 7%, the year has been an unusual one. The Govt. is expected to present a Budget which pushes the GDP towards positive numbers. Pre-budget talks have taken place with the stakeholders comprising of all the economic department and industries.

The health sector is one area budget should focus on for long term positive growth of the country, human resource is the biggest resource we have. Fiscal policy changes, with special covid-related deductions or allowances may help increase consumer spending. These measures, along with others, may cost government extra in the short run but will surely be a positive in the long-run for the nation.

Liquor/Beer trade is directly regulated and controlled by respective states. Centre earns no revenue from the trade, which equates to trade not being considered while drafting budget and policies. One similar case has been GST. Liquor has been kept out of GST purview, while states and centre have not concluded that trade was hit hard. Same is the case with the budget. The Liquor industry can/may only benefit from some of the fiscal policies/ (direct taxation) changes.

State excises, although, can better support the liquor trade through various measures such as:

A) Adjusting the license fees for retail outlets and brands. (fees are deposited in advance for next year, but the last year was hit by covid)

B) Equal license fees for Indian and imported brands (currently imported brands having the advantage of 70-90% lower brand and label fees in most states)

C) Lower the duty on beer (duty on per alcohol per cent ABV is 3-5 times higher for beer than hard liquor), which may encourage consumers towards a lower alcohol beverage.

D) Should make borrowing an easier process for the industry burdened with high working capital and compliances.

States and Centre should develop ways to help the Liquor industry sustain these tough times, by planning to bring the trade under GST somehow. GST was applied to all the raw materials/inputs, but GST is not applicable on sale, thus being an additional cost. On average, the cost to produce and distribute rose by 18% after GST application, but the prices didn’t compare.

With around 30% GDP contribution, and employing over 23% of the population manufacturing sector is significant for the nation. Manufacturing and industrial units should be incentivized through tax and compliance relaxations, especially in the case of MSME and start-ups, and non-compliance should not attract criminal proceedings and should be let off with minor penalties. Which in turn may help them cut cost and thus help sustain the ecosystem better, may grow and employ more people, growing economy in return._____________________