BENGALURU: Alcohol in Beverage (AIB) is the new Excise Policy in Karnataka. It replaces the over six-decade-old taxation policy on bulk litre of alcohol. The State Government on Friday issued the final notification on the new tax policy announcing the Karnataka Excise (Excise Duties and Fees) (2nd Amendment) Rules, 2026. The same shall come into force with effect from May 11.
The government had issued a draft notification on the proposed amendment on April 18 calling for objections and suggestions, which have been “considered”.
Karnataka is the first state in India to bring in AIB taxation policy.
AIB means the “alcohol content/volume per litre of liquor such as brandy, whisky, gin, rum, beer, wine, fruit wine, fortified wine,” read the notification. The government has slashed the excise slabs under which alcohol in Karnataka is sold (as per the maximum retail price), from 16 to eight now.
The first five slabs (priced between lowest and competitive MRP) contribute around 75% to the Excise revenue and it is these slabs which will be most affected by the new tax policy. The MRP on the most sold 180 ml (nip) tetra packs of Indian Made Liquor (IML) whiskey, rum, brandy, gin, vodka will go up by at least 20%, said industry sources.
The manufacturers of low cost IML have expressed concern that the proposed system may “disproportionately benefit multinational premium brands while placing domestic distilleries and regional manufacturers at a competitive disadvantage, potentially affecting local investments and employment,” said placed sources.
“Premium liquor brands will see a price decline between 16% and 20%, while mass-market products (IML) may become costlier by 20-25%,” added sources.
Meanwhile, the International Spirits & Wines Association of India (ISWAI) has welcomed the AIB tax policy in Karnataka. It is a “forward-looking step towards modernising and simplifying the excise framework. The shift to a more rational tax structure is progressive and will bring pricing in line with other states, which in turn will support the growth of premium segments that are key drivers of revenue,” said Chief Executive Officer, ISWAI, Sanjit Padhi.
He added that the reforms “align with ISWAI’s principle of ‘drink better, not more.’ As consumers opt for higher-quality products, premiumisation reinforces a culture of quality over quantity and moderation,” he added.