The next time you pick up a bottle of imported Scotch whisky, chances are that the hole in your pocket may be a bit smaller. This year's Budget may see the customs duty burden on imported liquor coming down to 150 per cent.

At present, the basic import tariff on liquor is 182 per cent with the Centre levying a Special Additional Excise Duty of 4 per cent.

The Kelkar task force on indirect taxes has not said anything specific on liquor but has recommended a 150 per cent duty rate for all specified agriculture products and demerit goods.

Under the World Trade Organisation regime, India can impose a 150 per cent bound rate of customs duty on agro and demerit products, which include liquor.

The task force has also suggested that an expert group should be appointed to examine the entire issue in greater detail.

With the empowered committee on value-added tax already examining a concurrent proposal to rationalise the state-level taxes -- including those on both imported and domestic liquor -- the Kelkar proposal will sail through in this Budget, say government sources.

Many states levy countervailing duty on imported liquor to ensure a level playing field for domestic liquor manufacturers.

The ministry's own estimates show that a reduction in the duty on imported liquor will not adversely affect revenue.

Annually, about Rs 70 crore (Rs 700 million) is collected from the sale of imported liquor and some argue that a reduction in the rates might lead to higher collections as more liquor would then be sold through legitimate channels.

Liquor manufacturers claim that nearly 90 per cent of imported stuff are now smuggled as unscrupulous traders take advantage of the steep import duty rate.

Government officials said with the impending rationalisation of the state levies in the run-up to VAT, the time was right to push through the import duty rationalisation.

Run-up to the Budget 2003