Understanding Rajasthan's 20% Cow Cess on Liquor: The Tax Behind the Viral Bar Bill

Jaipur:

A recent incident in Jodhpur sparked online debate when a customer discovered a 20% 'cow cess' charged on the VAT for beer at a local bar. This additional tax, designed to support cow conservation efforts in Rajasthan, became a topic of discussion after the bill went viral on social media.

The viral bill from Geoffrey's bar at Jodhpur's Park Plaza dated September 30 showed an order of corn fritters and six beers totaling Rs 2,650. After adding GST, VAT, and the 20% cow cess, the final amount reached Rs 3,262.

While many online users expressed surprise at this charge, both government officials and hotel management have clarified that this isn't a new implementation but has been in place since 2018.

Park Plaza's manager Nikhil Prem explained to NDTV: "This government notification has existed since 2018. We charge a 20% cow cess on the VAT amount for beer and liquor sales. While most hotels simply list it as a surcharge, we explicitly mention it as cow cess. The collected funds are deposited online for cow protection and conservation initiatives."

This transparent labeling of the 'cow cess' on the bill appears to have reignited public interest in this long-standing tax. The manager emphasized that this cess only applies to VAT on alcoholic beverages, not to food items which fall under GST regulations.

Rajasthan's Finance Secretary (Revenue), Kumar Pal Gautam, clarified that the cow cess operates as a surcharge applied whenever value addition is charged on a bill. When customers order liquor at establishments where prices exceed MRP (Maximum Retail Price), this value addition attracts both VAT and the subsequent cow cess.

"If a restaurant or bar charges extra for liquor, they must pay VAT due to value addition on the liquor sale, and consequently, the cow cess is also applied," the Finance Secretary stated.

This policy dates back to June 22, 2018, when then-Chief Minister Vasundhara Raje's government officially implemented a 20% surcharge on all forms of liquor sold by dealers under the Rajasthan Value Added Tax Act, 2003. The funds collected are allocated for cow conservation and protection efforts.

Prior to this increase, the surcharge stood at 10%. Chief Minister Raje expanded it to include liquor in 2018 specifically to support cow shelters and conservation programs. When the Congress government under Ashok Gehlot came to power, they maintained this tax policy.

Currently, the Rajasthan government allocates over Rs 2000 crore for grants and subsidies related to cow welfare, with approximately Rs 600 crore directed to cow shelters. Finance ministry sources indicate that while the cow cess contributes to this fund, it doesn't fully cover the expenses, necessitating additional government grants and financial allocations.