Regulations on Fees for Traditional Domestic Liquor in Gandaki Province

July 12, Pokhara – Following the enactment of a law, Gandaki Province has introduced new regulations to implement its ambitious plan for branding traditional domestic liquor.

Immediately after announcing the regulations, the province government has formally requested the federal government to determine the rate of internal excise duty to be affixed on bottles of branded domestic liquor.

The province’s Development Problem Solving Committee, chaired by Chief Minister Surendra Raj Pandey, passed a decision urging the federal government to establish the excise duty rate.

The “Gandaki Province Traditional Domestic Liquor Act, 2082” laid the groundwork, and recently the Council of Ministers approved the “Gandaki Province Traditional Domestic Liquor Regulations, 2083”. The regulations mandate that internal excise duty stickers must be affixed to all liquor sold.

However, under constitutional jurisdiction, only the federal government has the exclusive authority to determine the excise duty rates and collect revenues, so the province lacks the power to set a separate rate independently.

At the council meeting, there was discussion on whether the province should set the excise tax rates independently or request the federal government to assign this authority to the province.

A committee formed at the ministerial level, led by Minister for Physical Infrastructure and Transport Govind Bahadur Nepali, and the Social, Economic, and Infrastructure Committee, conducted extensive discussions on the matter. Minister Nepali stated that the cabinet decided to pass the regulations with the conclusion that an excise duty rate would be affixed to facilitate branding.

While the regulations are awaiting publication in the official gazette, on Tuesday the 15th meeting of the Development Problem Solving Committee, which included province ministers, secretaries, and representatives from rural municipality and municipality federations, decided to formally request the federal government to facilitate the excise duty rate determination.

The committee emphasized protecting the uniqueness of the domestic liquor industry, preserving indigenous skills, and supporting small producers by requesting a special and practical excise duty rate from the federal government.

Rule 5 (gh) of the regulations clearly states that liquor can only be sold if an internal excise duty sticker is affixed to each bottle. If unstickered products are found, they will be confiscated, and sellers penalized as per law. However, since the federal government has not yet implemented specific tax policies or sticker provisions, the province fears these rules may remain ineffective on paper alone, prompting it to pressure the federal government.

The regulations also set legal and technical standards for producing ‘marcha,’ a key ingredient of traditional liquor. Businesses must obtain a separate five-year license to produce marcha.

Plastic pouches for packaging liquor are entirely prohibited. Only food-grade or BPA-free transparent bottles may be used. Stainless steel containers are mandated for production, and liquor is classified into premium, standard, and light categories based on alcohol content and must undergo laboratory testing, reflecting strict health and technological standards.

Business operators must secure licenses from office heads with business registration certificates, valid only until the end of the fiscal year by mid-July. Failure to renew may lead to license cancellation. Liquor sales are permitted only between 10 a.m. and 10 p.m.

Anyone wishing to engage in any commercial activity related to domestic liquor — including production, collection, processing, packaging, labeling, or distribution — within the province must obtain a license.

Liquor with more than 40% alcohol concentration is classified as premium. Liquor with 16% to 40% alcohol is standard quality, while light or mild liquor contains 12% to 16% alcohol.

Operators must renew licenses annually by the end of the fiscal year or within any extended period allowed by financial regulations. The government has also offered a flexible option to pay renewal fees covering up to three fiscal years at once.

Failure to renew within the allocated time can lead to immediate cancellation. The regulations also specify penalties and confiscation of products for buying or selling liquor without excise duty stickers.

The regulations prohibit engaging individuals under 18 years of age and pregnant women in any purchase, sale, or handling of domestic liquor.

Water used in production must be clean and potable, and grains or fruits must be carefully selected. Licensed industries must produce or process domestic liquor only by blending spirits produced from patented steel plants. Wine production requires fermentation in patented steel tanks or wooden vessels.

Every batch of produced liquor must be tested by accredited laboratories for alcohol content, pH level, and acidity. The maximum retail price of the liquor must be publicly announced and mandatorily labeled on bottles. Any packaging size, quality improvement, or new brand introduction requires prior approval.

Rule 13 of the regulations completely bans packaging domestic liquor in plastic pouches, mandating the use of transparent, quality bottles.

According to Rules 15 and 20, domestic liquor is categorized into three tiers based on raw materials (such as millet, buckwheat, barley, wheat, maize, or fruits like apples and oranges), production methods (raksi, liquor, wine), and alcohol content.

Alcohol content above 40% qualifies as premium; 16% to 40% is standard; and 12% to 16% is considered light or mild.

Under Rules 14 and 20, every license holder must maintain clear, updated daily records of production, collection, sales, and stock throughout the year. Within 15 days after each fiscal year’s end, a certified annual report detailing production volume, raw material sources, workforce, sales, and stock must be submitted to the office.