Draft excise amendments introduce AIB metric and price-linked slabs, raising duties on premium and high-strength liquor while retaining concessions for defence channel
The Karnataka government has issued a draft notification proposing a revised taxation framework for alcoholic beverages, with duties to be determined by alcohol strength, product category and declared price.
The draft seeks amendments to the Karnataka Excise (Excise Duties and Fees) Rules, 1968, and has been opened for public objections and suggestions for seven days before being taken up for final consideration.
Standardised Tax Metric
A key change in the proposal is the formal introduction of “Alcohol-in-Beverage (AIB)” as a standard measure of alcohol content per litre across categories such as whisky, rum, beer, wine and other products. The move signals a shift towards a more uniform and structured taxation methodology.
Under the revised Schedule A, Indian Made Liquor (IML), including brandy, whisky, gin and rum supplied to defence and paramilitary canteens, will attract a duty of Rs 50 per bulk litre at 42.8 per cent v/v. A proof-litre based levy will continue for higher-strength variants. In contrast, liquor sold through regular commercial channels will be taxed at Rs 1,000 per litre of pure alcohol, reflecting a sharp differential between defence and civilian markets.
For beer, bottled and draught variants with alcohol content of up to five per cent will be taxed at Rs 12 per bulk litre, while those with alcohol content between five and eight per cent will attract Rs 20 per bulk litre.
Price-based Slabs
The draft also proposes a price-linked slab system for Additional Excise Duty (AED) and Additional Countervailing Duty (ACD). Under this structure, IML duties will begin at Rs 50 per litre of pure alcohol for products priced up to Rs 470 per case and rise to Rs 3,700 per litre for premium products priced above Rs 5,001.
A similar slab-based structure has been proposed for beer under Schedule D, where AED and ACD will range from Rs 800 to Rs 2,700 per litre of pure alcohol depending on the declared price band.
The proposal continues to retain concessional or differential duty treatment for defence supplies, exports and inter-state transfers, where lower rates or exemptions will remain applicable.
Overall, the proposed amendments point to Karnataka’s move towards a dual-parameter excise framework that combines alcohol strength, measured through AIB, with product pricing to determine tax liability. The revised structure is expected to raise the tax burden on premium and high-strength liquor segments while maintaining lower rates for institutional and defence channels.
