From whisky to beer: Karnataka’s new tax plan could raise liquor prices

Adding further strain to the stretched household budgets in Karnataka, the Siddaramaiah government has issued a draft notification proposing sweeping amendments to the Karnataka Excise (Excise Duties and Fees) Rules, 1968, signalling a revision in liquor taxation and pricing across the southern state. 

According to the draft published on April 18, a new concept of alcohol-in-beverage (AIB) has been introduced, which defines alcohol content per litre across categories like whisky, rum, beer, wine, and other liquors. 

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Why has the government hiked liquor prices? 

The Congress government in the state has announced a new taxation system with an aim to boost state revenue. Under the revised taxation framework, liquor taxes will be calculated on the basis of alcohol content instead of the existing criteria. 

As per the present rules, brewers must specify details of composition, including limits on sugar addition in malt on grain-based beverages such as ales, porters, and stouts. 

Will the excise duty structure be revised?

As per the draft, a revised excise duty structure for Indian-made foreign liquor (IMFL), including whisky, brandy, gin, and rum, will be introduced. This will comprise duties pegged to alcohol content and the category of sale.

A uniform duty of ₹1,000 per litre of pure alcohol will be levied for distributor-level supply, including imports from other states and countries. 

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What are the new taxation slabs for beer? 

• Up to 5% alcohol: ₹12 per bulk litre
• 5%-8% alcohol: ₹20 per bulk litre

Which liquor brands will be impacted? 

According to media reports, consumers can expect an increase of around ₹10-25 for a 180ml bottle across several popular brands. The estimated price revisions are as follows: 

• Original Choice: Likely to go from ₹95 to ~₹115
• Old Tavern (OT): Expected to rise from ₹80 to ₹100
• Raja Whisky: Set to increase from ₹70 to ~₹95
• Haywards: Expected to go up from ₹100 to ~₹120

The additional excise duty slabs will be reworked on the basis of declared price ranges, significantly impacting premium liquor segments. 

Will supplies from military canteens be impacted?

It further mentioned that separate provisions have been included for military canteens, CAPF and paramilitary supplies across the state, maintaining separate treatment under the excise regime.