In a 1st in India, Karnataka links liquor tax to alcohol content | India News
BENGALURU: Beer and wine could get cheaper as Karnataka introduced a new alcohol-in-beverage (AIB)-based excise duty system from April, becoming the first state in the country to link liquor duty directly with alcohol content. The new framework will completely deregulate government pricing and bring down the pricing slabs to eight. Presenting the government’s 2026-27 budget on Friday, CM Siddaramaiah said the uniform excise duty per liter on alcohol would be phased out over 3-4 years with gradual price changes to avoid market disruption. The reforms aim to modernize the excise system, improve transparency, simplify pricing and ease of doing business.“An AIB-based excise duty structure is recognized as the gold standard for alcohol taxation globally, as it directly targets alcohol content which is the primary source of negative externalities,” the CM said as he set an ambitious revenue target of Rs 45,000 crore from the excise sector for the next financial year.In India, typical beer ABV (alcohol by volume) ranges from 4%-8%, with stronger variants at 8%. Whiskey typically has an ABV of 36%-50%. The AIB system imposes higher taxes on high-strength alcohol, potentially driving consumers to lower-alcohol alternatives.Industry representatives welcomed the policy. “AIB-based taxation is a historic milestone and a beacon for excise policy reforms across India… The product to be taxed is alcohol and not water. It is widely followed across the world and encouraged by organizations like WHO,” said Vinod Giri, Director-General, Brewers Association of India.A United Breweries spokesman praised the government’s “intention to strengthen the regulatory and policy framework of the sector”. Shares of United Breweries rose after the announcement.Sanjit Padhi, CEO of the International Spirits and Wine Association of India, welcomed the move to de-price liquor. “The eight slabs offer flexibility to brands to set prices. Pending the final tax structure, we expect a stable policy to encourage investment and premiumization, shifting consumers away from lower-end products to higher-priced options,” he said.The government also plans to promote alcohol-related tourism, allowing tasting sessions at distilleries and on-site sales. Distilleries and breweries will be allowed to operate 24-hours a day and beer labels will no longer require mandatory disclosure of malt and sugar content.The tax announcement comes amid controversy over alleged corruption of Rs 5,000 crore in liquor license issue. The opposition demanded the resignation of Excise Minister RB Timmapur. He denied the allegations.
