Union Finance Minister Nirmala Sitharaman, in her Budget 2021 speech, has announced the imposition of Agriculture Infrastructure and Development Cess (AIDC) on specified goods -- including alcoholic beverages, gold, silver, cotton, peas, apple, petrol, and diesel.
Agricultural infrastructure cess of 100% has been proposed on alcoholic beverages, while on gold, silvers and dore bar, it's 2.5 per cent. On apples, it's 35 per cent, while on cotton it's 5 per cent each. The cess has been imposed on all alcoholic goods (Brandy, Bourbon, whiskey, Scotch etc.)
Experts say that the prices of imported alcoholic goods will remain unaffected due to change in the composition structure.
"For imported spirits and wines with alcoholic strength less than 80%, Basic Customs Duty has been reduced from 150% to 50% while Agriculture Infrastructure and Development Cess (AIDC) is being imposed @ 100% on the same value. The net effective rate of import duties remains at 150% and there will be no adverse impact on the industry,” said Darshan Bora, Partner, ELP.
A 100% cess will also be imposed on other fermented beverages for example, Cider, Perry, Mead, sake, mixture of fermented beverages or fermented beverages and nonalcoholic beverages.
"AIDC has been imposed for the purposes of financing the agriculture infrastructure and other development expenditure. On alcohol, it has been proposed at 100% with a reduction of basic customs duty at 50% from 150%. This is for imported alcohol and the endeavour seems to be to earmark money collected, specifically for the above funding requirements without affecting overall pricing," said Shashi Mathews, Partner, IndusLaw.
"To ensure the imposition of cess does not lead to additional burden in most of these items on the consumer, the basic customs duty (BCD) rates has been lowered. This cess shall be used to finance the improvement of agriculture infrastructure and other development expenditure," the Finance Ministry said in a statement.
The Agri Infra Development Cess will be applicable from 2 February, 2021, Sitharam said.
