New excise regime comes into effect

With the new excise regime, which taxes on the quantum of alcohol in the bottle and calibrates it with the social cost, coming into effect on Monday (May 11), the lower-end liquor in Karnataka is set to become dearer while certain premium labels could be cheaper.

The latest price after the changes is likely to be known by Tuesday (May 12) as many manufactures were yet to complete the formality on Monday (May 11). However, some whisky, bourbon whiskey, beer, gin, brandy, vodka and liqueur labels — in both premium and mass market segments — with marginal changes in price have been notified to be effective from Tuesday (May 12).

The new policy, set to discourage consumption of liquor with high alcohol content, is estimated to increase the sales of cheaper drinks that have high alcohol content by about 15% to 20% this year, and the prices will be revised over the next three to four years. The premium drinks in which alcohol content is low will be taxed lower. The high alcohol content Indian Made Liquor (IML) which is consumed by the lower strata brings more than 70% excise revenue to the exchequer.

A number of manufacturers were yet to make a formal declaration of price and ‘Alcohol in Beverage’, and the Karnataka State Beverage Corporation Ltd. (KSBCL), through which liquor is distributed, did not sell any IML or beer on Monday (May 11). Sources said that only a small quantity of wine and low-alcohol beverages were distributed on Monday (May 11).

KSBCL sources said that the prices will be automatically calculated once the price band in which the producer wants to place his product is made known along with the alcohol, the excise duty, and additional excise duty. “There will be no manual intervention. Every millilitre of pure alcohol in the liquor will be taxed,” they said.

The policy, which reduces the complicated slab system to eight from the earlier 16, is based on the recommendations of the K.P. Krishnan-headed Resource Mobilisation Committee for excise reforms, and calibrates the price of liquor in the State with the social cost, including the cost incurred on medical treatment in public health centres, consequences of accidents committed by those under the influence of alcohol, and domestic violence. The social cost is calculated to be ₹1,200 per litre of alcohol in 2024-25. It is estimated to increase to about ₹2,000 per litre in 2028-29. The lower-end high alcohol content liquor becomes expensive under this new calculation.