Daijiworld Media Network – Bengaluru

Bengaluru, Apr 20: Liquor consumers in Karnataka could soon face a sharp increase in prices as the state government moves ahead with a major overhaul of its excise tax structure.

A draft notification has been issued proposing a new ‘Alcohol-in-Beverage (AIB)’ policy, under which taxation will be based on alcohol content rather than bottle size.

Under the proposed system, excise duty will be calculated on the actual alcohol content in each bottle. Beverages with higher alcohol concentration will attract higher tax, potentially pushing up prices of commonly consumed Indian-made liquor such as whisky, rum, brandy and gin by up to 20%.

The government is planning to replace the existing quantity-based taxation model with this alcohol-content-based system. If implemented, Karnataka would become the first state in the country to adopt such a framework.

The proposed shift is expected to hit lower-priced liquor segments the hardest. At present, alcohol is sold across various MRP slabs, and under the new structure, the first four slabs—primarily consumed by lower and middle-income groups—are likely to become more expensive.

These categories account for a significant share of excise revenue, with an average alcohol content of around 42.8%. The first four slabs alone contribute nearly 80% of the state’s excise earnings. Last year, the price of a 180 ml bottle rose from Rs 80 to Rs 95, and under the new system, it could further increase to Rs 105–Rs 110, adding to the financial burden on consumers.

Reacting to the proposal, Arun Kumar Parasa, president of the Karnataka Brewers and Distillers Association, expressed concern over the move.

He said the lower-priced slabs are intended for ordinary consumers and any price increase would impact the market. “We will discuss this with chief minister Siddaramaiah. We are hopeful that the government will consider our suggestions before issuing the final notification,” he said.

The government plans to implement the changes under Section 71 of the Karnataka Excise Act, 1965. The draft notification has been placed in the public domain for consultation, with a final decision expected in the coming days.

Overall, if implemented, the AIB policy is set to significantly reshape Karnataka’s liquor pricing structure, with wide-ranging implications for consumers as well as the industry.