Karnataka Issues Draft Notification On Alcohol-by-Volume Based Excise Duty System
Karnataka proposes alcohol-by-volume tax system to revise excise structure.
The Karnataka government has issued a draft notification proposing a major overhaul of its excise taxation system, shifting to an alcohol-by-volume (ABV) based regime that could significantly change how liquor and beer are taxed across the state.
The draft amendments, published in the Karnataka Gazette under the Karnataka Excise Act, 1965, propose changes to the Karnataka Excise Rules, 1968. The key reform introduces a new concept called “Alcohol-in-Beverage (AIB),” which refers to the amount of pure alcohol content per litre in alcoholic beverages. This marks a potential move away from the existing slab-based taxation system toward a structure directly linked to alcohol content.
Under the proposed framework, excise duty for distilled spirits supplied to distributor licensees would be levied at ₹1,000 per litre of pure alcohol. This rate would apply uniformly to products manufactured within Karnataka, imported from other Indian states, and imported from abroad. A similar ₹1,000 per litre rate has also been proposed for bottled beer supplied to distributors, indicating a unified approach based on alcohol content rather than product category.
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For certain regulated retail supplies, such as those made to defence and paramilitary canteens, the existing structure would remain unchanged. Beer duties in these cases would continue to be calculated based on bulk litres and alcohol strength, with ₹12 per bulk litre for beer containing up to 5% alcohol and ₹20 per bulk litre for beer with alcohol content between 5% and 8%.
The draft notification also proposes revisions to Schedule D of the excise rules, which governs additional excise duty and countervailing duty. These changes introduce detailed price-based slabs alongside per-litre alcohol-based rates, creating a hybrid model that combines both value-based and alcohol-content-based taxation mechanisms.
According to the state government, the draft is currently open for public consultation, and stakeholders may submit objections or suggestions to the finance department. If implemented, the new ABV-based system is expected to align Karnataka’s excise policy with international taxation models, potentially impacting retail pricing, consumption trends, and overall state excise revenue collection.
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