BENGALURU: The maximum retail price (MRP) on the common man’s alcohol -- whiskey, rum, gin and brandy -- in Karnataka will soon increase by at least 20%, with the government issuing a draft notification to bring in a new tax structure that will tax the content of alcohol in beverages. Higher the content of alcohol in Indian Made Liquor (IML) made in Karnataka, higher will be the tax on it once the amendment comes into effect.
IML in the state is sold in slabs depending upon the MRP. The first four excise slabs, which till now are with the lowest MRP and meant for low-income group consumers, now stand to become more expensive. The average alcohol content in this segment of IML is 42.8v/v.
These four slabs contribute 80% towards the excise revenue. From Rs 80 per 180 ml (nip) the price last year went up to Rs 95 per nip. It will now cost between Rs 105-110 with AIB taxation.
The government on Saturday issued draft notification to amend a more than six-decade-long alcohol taxation policy and usher in ‘Alcohol-in-Beverage’ (AIB)-based excise duty structure. With amendment to Karnataka Excise (Excise Duties and Fees) Rules, 1968, the state will become the first in India to introduce excise duty based on AIB.
Though this rule is prevalent in the western countries, this is the first time an Indian state has moved to change the tax structure from volume based (per bulk litre) to actual alcohol content in beverages.
The new tax regime, which will come into play phase wise following the amendment, will increase the MRP of alcohol sold in the first four Excise slabs (the cheapest, with 42.8% alcohol v/v), while bringing down the cost of premium alcohol in the top slabs like Scotch (bottled in origin with 40% v/v). Prices of mild beer (less than 5% v/v) may face lower taxes.
Market will be disrupted: Brewers assn prez
The brewers and distillers in Karnataka expressed their disappointment with the proposed amendment. “Alcohol sold in Karnataka in the first four slabs is affordable and considered common man’s alcohol. The MRP on these slabs will go up putting further pressure on common households. This will disrupt the market significantly thereby affecting the revenue mobilisation also,” said president, Karnataka Brewers and Distillers Association Arun Kumar Parasa.
He added that the industry is hugely disappointed with the government move to bring in AIB. “We will discuss with the chief minister. We are confident that the government will consider our suggestions before the final notification,” he added.
The government proposes to make the amendment under Section 71 of the Karnataka Excise Act, 1965, “The draft will be taken into consideration after the expiry of seven days from the date of its publication in the official Gazette,” read the notification.