Price of some premium liquor labels to come down from July 1 in Karnataka, with new slabs for calculating additional excise duty

Karnataka government reduces excise duty on premium liquor, expected to lower prices by 10-20% from July 1.

In a news that could bring some cheer to tipplers in Karnataka, the State government has notified fresh slabs for calculating additional excise duty, which is expected to bring down the cost of some premium liquor labels. The new prices will come into effect from July 1.

In a downward revision of liquor prices after many years, the government has rationalised the slabs and brought down the number of slabs from 18 to 16. The notification said the revision would be on brandy, whiskey, gin, rum, and other liquors, but beer, wine, toddy, and feni are not included.

While the slabs have been notified, Excise Department sources said the actual cost of each liquor would be known only after the distillery notifies the declared price of their labels. “It is difficult now to say whether the cost of a particular brand will come down or not since each slab has a range. The liquor manufacturers will start providing fresh declared cost of their labels now,” sources said.

A notification issued on June 18, with the Karnataka Excise (Excise Duties and Fees) (Amendment) Rules, 2024, has slabs being re-jigged. Following the new notification, the highest additional duty of ₹3,000 per bulk litre to be levied on liquor would be on the liquor with a declared price (by the distillery) of over ₹20,000 in comparison with the earlier regime where the highest additional excise duty of ₹5,358 per bulk litre was imposed on the declared price of ₹15,000 and above.

The rationalisation of the slabs for calculating the additional excise duty, especially on premium liquor, had been announced in the Budget to address a long-pending demand of distilleries and the hospitality industry here to make the prices competitive in Karnataka with neighbouring States. The rationalisation is expected to mop up additional excise revenue.

The International Spirits and Wines Association of India had also urged the government to consider the rationalisation of additional excise duty on premium products. It had pointed out that cheaper brands are much cheaper and premium brands much costlier in Karnataka when compared with other States.

Currently, as per the industry estimate, most premium brands of liquor in Karnataka have about 80% or more additional excise duty on the declared price. According to a government source, owing to high additional excise duty, premium liquor contributes just about 2% to 3% of the total excise revenue of Karnataka while it is 52% in Telangana.