Average global inflation remained stable at 2.5 percent in the decade of 2011-20. Inflation climbed up from 2021 and spiked in 2022 due to supply disruptions across the world. Headline inflation in India exceeded the upper limit of RBI’s tolerance band during the COVID and post-COVID period. This study explores the changing pattern of the contribution of supply disruption in headline inflation in India.

Any tax regime creates a system for compliance by the taxpayer and imposes certain tax and compliance costs on the taxpayer. In the interaction between the tax system and the taxpayer, there arise possibilities of some friction. Disagreements could arise in the interpretation of the law in any particular case. The law provides a mechanism for resolution through the dispute settlement process. A taxpayer may perceive some challenges in complying with the tax regime. Some of these could be addressed through administrative measures.

The study proposes to examine the landscape of friction between the taxpayer and the tax system for the Income-Tax regime.

sanctioned on 18 October 2024 vide MOF email.

The objectives of this study are –- a) a comprehensive assessment of the Excise Policy of a State, comprising both regulatory and taxation policies; b) an assessment of the State tax structure on alcoholic beverages, comprising both State excise and sales tax on alcoholic beverages; c) an assessment of processes and procedures of State Excise administration; d) an assessment of State tax revenue from alcoholic beverages vis-à-vis sales (in volume) – estimation of the effective tax rate (ETR) of different types of alcoholic beverages.

This study will not only develop State-specific suggestions for reforms in alcohol tax policies but also provide ‘best management practices’ in regulating and administering the possession, production, distribution, and sales of alcoholic beverages across States. These outcomes could significantly enhance the efficiency and effectiveness of alcohol tax policies and administration. Streamlining processes and procedures in State excise administration is always desirable to improve tax compliance and efficiency.

This study aims to provide a comprehensive understanding of consumption patterns and their implications for public policy in India. It seeks to inform taxation strategies for intoxicants by analysing consumer responses to prices and identifying factors influencing consumption habits, ultimately helping to design interventions that encourage healthier choices. Furthermore, the research intends to quantify the healthcare costs associated with intoxicant consumption, providing crucial data for public health planning. Finally, leveraging the extensive data from the latest Household Consumption Expenditure Survey (HCES): 2022-23 of the National Sample Survey Office (NSSO), the study will assess the distributional impact of GST across various consumer groups and estimate States’ revenue potential based on consumption expenditure, thereby supporting evidence-based economic policymaking.

― Paper 1: Price, Cross-Price and Income Elasticity of Consumption of Alcoholic Beverages in India (based on NSSO’s HCES: 2022-23 and the Consumer Pyramids Household Survey (CPHS) database of the Centre for Monitoring Indian Economy (CMIE))

― Paper 2: Price, Cross-Price and Income Elasticity of Consumption of Tobacco and Tobacco Products in India (based on NSSO’s HCES: 2022-23 and CMIE’s CPHS database)

― Paper 3: Assessment of Distributional Impact of GST in India based on NSSO’s HCES 2022-23

― Paper 4: Factors influencing households’ decision to quit or adopt consumption of alcoholic beverages in India (based on NSSO’s HCES: 2022-23 and CMIE’s CPHS database)

― Paper 5: Factors influencing households’ decision to quit or adopt consumption of tobacco and tobacco products in India (based on NSSO’s HCES: 2022-23 and CMIE’s CPHS database)

― Paper 6: The relationship between consumption of intoxicants and households’ health expenditure (based on NSSO’s HCES: 2022-23 and CMIE’s CPHS database)