Karnataka becomes first state to have alcohol tax structure in beverages: Here’s how liquor and beer prices will change | Today’s news
Karnataka has become the first state in India to have an alcohol-in-beverage (AIB) excise duty structure for alcoholic beverages. The move is aimed at rationalizing liquor prices, making alcoholic beverages available to consumers in Karnataka at cheaper prices and aligning prices with neighboring states, including Tamil Nadu, Andhra Pradesh, Telangana, Maharashtra and Kerala.
“For the first time in India, the AIB-based excise structure has been implemented in Karnataka from May 11, 2026. It is globally recognized as the gold standard for alcohol taxation,” the Karnataka Excise Department said in a statement.
Excise tax based on alcohol in beverages
The AIB-based excise tax structure was announced by Karnataka Chief Minister Siddaramaiah in the 2026-27 budget and the new rules officially came into force on 11 May 2026, according to the Excise Department.
Karnataka would adopt a globally recognized tax system that links excise duty to the alcohol content of beverages, the CM said in March.
“The alcohol-in-beverage (AIB) excise tax structure is globally recognized as the gold standard for alcohol taxation because it directly targets alcohol content, which is the primary source of negative externalities,” he said.
The CM has also set an ambitious revenue target ₹45,000 crore from the excise sector for 2026-27.
The proposal was first floated by the KP Krishnan-led Resource Mobilization Committee as part of its report on excise reforms in Karnataka.
How the prices will be calculated
It replaces a system based on volumetric liters with a new model that calculates prices based on the percentage of alcohol in drinks.
Under the new rules, the government rationalized the prices of liquor and beer across the board. The revised MRPs apply to all products manufactured after May 11, 2026. The AIB structure deregulates government-administered price fixation. Instead of the state strictly setting prices, producers now have the option to place their products in specific price tables based on market considerations and alcohol content.
Under the new policy, government-administered price fixing was completely deregulated. According to a government notification, the Indian Made Liquor (IML) boards have been rationalized and reduced from the earlier 16 boards to eight boards. Product placement in boards was left up to manufacturers based on market considerations.
What will be cheaper and what will be more expensive
It is estimated that under the AIB-based excise duty structure, the prices of mild and 5 per cent alcohol lagers have fallen by 20-25 per cent. Premium Scotch whiskey prices have also been cut by 20 percent.
However, the prices of the first five slabs of India liquor produced under excise duty have increased by 20-25 per cent under the new policy.
As part of the changes, the Karnataka State Excise Department has also ordered the publication of revised maximum retail prices (MRP) for liquor and beer brands with details of prices and sizes in the state’s leading Kannada and English newspapers.
