The Karnataka state government will adjust tax rates throughout the 18 slabs of Indian Made Liquor (IML) to preserve its earnings and avoid trade diversion to adjacent states.
“In order to rationalise the tax slabs and make them competitive with neighbouring states, the tax slabs for IML and beer will be revised,” Chief Minister Siddaramaiah said in his budget speech.
Last year, the CM hiked the extra excise duty (AED) on IML by 20 per cent across all 18 pricing slabs, provoking industry objections.
The International Spirits and Wines Association of India had expected that the tax rise would lead to consumers purchasing products from other states through illicit supply channels, harming the profitability of licenced shops.
The worries appear to have come true, as the excise department has worked on a set of rates – raising on brands in certain slabs and decreasing in others – to guarantee that customers do not buy from states with cheaper taxes.
“After the rates are revised, the difference in prices between us and other states would be about Rs 10 per bottle,” claimed a government official.
The Excise department would also propose tweaks duties on beers and sections of distillers expect the some beer brands to become costlier.
The excise department collected revenues of Rs 28,181 crore in 2023-24 up to January end. The government has fixed a target of Rs 38,525 crore for 2024-25.
