The Karnataka government has announced a substantial increase in excise taxes on beer, raising the rate from 195 per cent to 205 per cent, alongside an additional 10 per cent duty. This move aligns with efforts to harmonise pricing with neighbouring states, which are not permitting the sale of Karnataka’s liquor while allowing their own products to enter the state freely.
The price adjustment aims to bolster government revenue. In light of the new tax rates, the pricing of top niche beer brands could see an increase of up to ₹10 per bottle, although this will vary based on manufacturing costs.
Considerable hikes are also anticipated for mid-segment liquors, excluding beer, toddy, wine, and fenny. Mid-level and lower local brands may experience a hike of less than ₹5 per bottle.
Previously, lower brands enjoyed an excise tax option of ₹130 per litre, which has now been eliminated, subjecting all beers to the 205 per cent tax bracket, again influenced by manufacturing expenses.
The excise department has issued a notification detailing these proposals, giving citizens seven days to file objections. The notification also mentions planned increases for other liquors like brandy, whisky, and gin, with expected hikes ranging from ₹10-15 per quarter.
The state’s new pricing strategy is primarily driven by a target set by the Chief Minister to achieve ₹40,000 crore in excise collections. This approach intends to keep liquor prices competitive compared to neighbouring states, where the sale of economical liquor in border areas has been notably higher.
A spokesperson from the excise department stated, “Neighbouring states are not allowing liquor from Karnataka to be sold, but are keen on allowing bottles moving from their states to Karnataka. To be on par with other states the price hike has been proposed. It is also a good source of revenue for the government.”
