Liquor to get costlier in Karnataka as govt proposes alcohol-based taxation

Bengaluru : In a significant policy shift, the Karnataka government has proposed a new method of taxing liquor based on its alcohol strength, potentially leading to a sharp rise in retail prices. A draft notification issued on Saturday outlines plans to introduce an Alcohol-In-Beverage (AIB) based taxation system.

The move is expected to raise the prices of widely consumed alcoholic beverages such as whisky, rum, gin and brandy by at least 20%. The impact will also extend to Indian Made Liquor manufactured in Karnataka.

At present, liquor is sold under different tax slabs based on MRP. However, the proposed system could disproportionately affect the lower slabs, which are popular among economically weaker sections. These segments contribute nearly 80% of the state’s excise revenue and have an average alcohol content of 42.8%.

Sources suggest that the price of a 180 ml bottle could increase from the current ₹95 to around ₹105–₹110. This comes after a recent price hike that had already raised costs from ₹80 to ₹95.

The government’s proposal seeks to overhaul a decades-old excise structure, aligning it with global practices where taxation is based on actual alcohol content rather than product category or price.

Industry stakeholders have raised concerns over the move. Arun Kumar Parasa, president of the Karnataka Brewers and Distillers Association, said the decision would burden common consumers and disrupt the market. He indicated that discussions with the Chief Minister would be held and expressed hope that the government would take industry inputs into account before issuing the final notification.