Liquor in Chandigarh is all set to get costlier from next month. The new excise policy is almost final and the Chandigarh Administration has agreed to increase the Value Added Tax (VAT) on liquor from 4 per cent to 12.5 per cent, bringing it on par with Punjab.

There will be a slight increase in other taxes and duty too. In 2008, Haryana increased VAT on liquor from zero to four per cent, while Punjab increased it from 4 to 12.5 per cent. With the revised excise policy, all liquor brands are likely to get costlier by around 20 to 25 per cent, increasing the city’s revenue by around Rs 50 crore per annum.

The excise policy, expected to be announced in a couple of days, is likely to see a marginal increase in the number of vends. The Administration has rejected the Municipal Corporation’s request to not allow vends in the periphery.

The governments of Himachal Pradesh and Punjab had been repeatedly writing to the Administration to increase VAT to curb inter-state smuggling of liquor. Though senior UT officials were initially against the move, they later agreed in principle. An attempt to increase VAT was made last year too, but it triggered a controversy as the then excise and taxation commissioner Roshan Sunkaria had sent the proposal straight to the UT Administrator, without routing it through Finance Secretary Sanjay Kumar. UT Advisor Pradip Mehra, too, was of the view that VAT be increased on liquor.

It was, however, alleged that Sunkaria, a Punjab-cadre IAS officer, had succumbed to the pressure of the Punjab liquor lobby. Gen S F Rodrigues (Retd) ordered an inquiry into the matter. In its report, the finance department ruled out any increase in VAT on the ground that the excise policy had already been notified for the year and it would amount to a breach of contract. With the contract expiring by the end of this month, the clause holds no substance this year.

“By bringing VAT on par with Punjab, the smuggling of liquor is definitely going to be curbed. Moreover, the pressing demand of the neighbouring states will also be addressed,” said a senior UT official.