Daijiworld Media Network – Bengaluru
Bengaluru, May 9: The Karnataka government has issued the final notification for implementing a new excise policy based on ‘Alcohol in Beverage’ (AIB), bringing a major change in the taxation system on liquor. The new policy will come into effect across the state from May 11.
With this, the existing ‘bulk litre’-based taxation system that has been in force for the past six decades will come to an end. Karnataka will become the first state in the country to implement an AIB-based taxation policy.
The government had issued a draft notification on April 18 inviting objections and suggestions from the public. After considering the responses received, the Karnataka Excise (Excise Duties and Fees) (Second Amendment) Rules, 2026, have been finalised.
Under the new policy, excise duty will be levied based on the ‘alcohol content’ present in various liquor categories including brandy, whisky, rum, gin, beer and wine. As part of the changes, the existing 16 excise slabs have been reduced to just eight slabs.
Industry sources said the impact of the new policy is likely to be more significant in the low-cost liquor segment, which contributes substantially to the excise department’s revenue.
In particular, prices of popular 180 ml tetra pack whisky, rum, brandy, gin and vodka are expected to rise by at least 20 percent.
At the same time, prices of premium liquor brands may decline by 16 to 20 percent. Industry experts expressed concern that while multinational premium brands may benefit from the move, local distilleries and regional manufacturers could face setbacks.
Sources said the new system may become a burden for low-cost Indian liquor manufacturers and could also affect local investment and employment opportunities.
Meanwhile, the International Spirits and Wines Association of India (ISWAI) has welcomed the policy.
Speaking on the development, ISWAI CEO Sanjit Padhy said the move is a forward-looking step towards modernising and simplifying the excise system. He said the policy would encourage the growth of premium products.
He added that the policy aligns with the principle of ‘Drink Better, Not More’ and would promote the consumption of quality liquor.