Shillong: Meghalaya Cabinet on Friday approved the reduction of Value Added Tax (VAT) from 40% to 37.5% on alcohol across Meghalaya.
A proposal to reduce VAT on different brands of alcohol and wines in the entire state was presented in the cabinet by the Excise Registration Taxation Stamps Department (ERTS).
“We decided to reduce the VAT from 40% to 37.5% on liquor,” Meghalaya deputy chief minister Prestone Tynsong said.
The government has also decided to revert to Rs 2 as lifting charges, after raising it by 25% in May 2020.
Tynsong said the expected revenue loss after reduction in VAT on alcohol will be approximately Rs 80 to 85 crore annually.
Tynsong said the decision was taken to cope up with the competition neighbouring Assam, which recently decided to reduce the VAT on alcohol ahead of Assembly elections in the state.
Majority of Meghalaya’s revenue comes from alcohol. The government had recently reduced VAT on fuel prices to 20% or Rs 15 per litre. The state government had earlier announced a revenue of over Rs 6 crore from alcohol in 2020.