Thiruvananthapuram: A Cabinet meeting has approved the draft bill for amending the General Sales Tax Act in order to withdraw the turnover tax imposed on companies producing foreign liquor in the State and to increase the sales tax on liquor by 4% in a bid to compensate for the loss that would occur as a result of the move.

The price of liquor will go up when the Bill is signed by the Governor after it is passed by the Assembly. The prevailing rate of tax on liquor is 247%. This will go up to 251%. The Bill scraps the 5% turnover tax at present imposed on companies producing foreign liquor in the State. This will bring in an additional profit of Rs 170 crore annually for the companies. The decision is to slap more tax on the consumers to offset the loss that would accrue to the exchequer.

Along with hiking the sales tax by 4%, it was also decided to raise the handling charges payable to the Beverages Corporation by 1%. In order to increase the handling charges, the government needs to pass only an order. This too will add to the rise in the price of liquor. However, to raise the tariff on liquor, the General Sales Tax Act would have to be amended.

As part of the procedure, the Cabinet which met online, gave its approval to the draft of the Kerala General Sales Tax Act (Amendment) Bill, 2022.