Liquor prices in TN may rise as GST hike pushes up costs on packaging, service

Chennai, Sep 24 (IANS) Liquor prices in Tamil Nadu are expected to move upwards, with the government-run Tamil Nadu State Marketing Corporation (Tasmac) preparing for a possible revision in rates.

The move follows the rollout of the revised Goods and Services Tax (GST) regime from September, which has increased the tax burden on packaging and service-related components in the liquor industry.

Although alcohol itself remains outside the GST framework, the changes under GST 2.0 have affected related inputs. Packaging materials such as bottles, caps, labels, and cartons are now taxed at 18 per cent, compared to the earlier 12 to 15 per cent. Similarly, transportation and logistics services have also been brought under the 18 per cent tax bracket.

Since the liquor industry is not permitted to claim input tax credit for goods and services used in alcohol production, these additional levies become a direct cost to manufacturers and distributors.

Industry stakeholders point out that these higher costs will inevitably be passed on to consumers in the form of increased retail prices.

With packaging and transportation forming a significant portion of production and distribution expenditure, the revised tax regime is expected to have a measurable impact on the overall pricing of liquor.

Tasmac, which holds the monopoly on liquor retailing in Tamil Nadu, is currently reviewing the implications of the revised regime and is expected to take a decision after consultations with manufacturers and the State Finance Department.

The corporation sells 551 brands, including 302 spirits, 26 beers, and 223 wines, through 4,787 outlets and exclusive FL-11 shops across the State.

For the financial year 2024-25 up to March, Tasmac reported a net revenue of Rs 48,344 crore, reinforcing its position as one of the largest revenue contributors to the state exchequer.

While a potential price hike could temporarily affect sales volumes, officials maintain that Tamil Nadu’s steady consumption patterns are likely to ensure that revenues remain largely stable.

The state government is closely monitoring the developments, balancing its dependence on excise and liquor revenues with consumer sensitivity to price changes. Any revision in prices will have a direct impact on household expenditure patterns, particularly given the wide base of consumers dependent on Tasmac outlets for their purchases.

A formal announcement on revised rates is likely in the coming weeks, once the assessments are complete. Until then, consumers in the state may remain wary of higher bills the next time they visit a Tasmac outlet.

--IANS

aal/dpb