In a significant move, the Kerala Assembly recently approved an amendment that extends sales tax regulations, previously applied to Indian-made wines, to include ‘horti-wine’ produced within the state.
Despite rapid passage and a lack of debate—overshadowed by the Opposition UDF’s protests concerning the Sabarimala gold ‘theft’ controversy—the Kerala General Sales Tax (Amendment) Bill, 2024, successfully made its way through the House following a review by the Subject Committee on Economic Affairs.
According to Finance Minister K. Balagopal, this new Bill is crucial for establishing a proper tax framework for ‘horti-wine.’ He highlighted that the state government had already given the green light for ‘horti-wine’ production from various agricultural products (excluding cereals) back in October 2022. This initiative, he explained on Tuesday, was a direct response to a long-standing request from local farmers and a strategic effort to curb the wastage of fruits and vegetables grown in Kerala.
Mr. Balagopal had previously signaled this direction during his 2023-24 Budget speech, announcing plans to align ‘horti-wine’ taxation with that of other Indian-made wines.
Currently, sales tax on foreign liquor is governed by the Kerala General Sales Tax Act of 1963. The Bill clarifies that ‘horti-wine’ will adhere to the definition provided in the Kerala Small Scale Winery (for production of horti-wine from tropical fruits and agricultural products of Kerala) Rules, 2022. As per these rules, ‘horti-wine’ is defined as a beverage created through the alcoholic fermentation of tropical fruits and other agricultural products, with an alcohol content not exceeding 15.5%.