BENGALURU: The state government’s newly introduced Alcohol In Beverage (AIB) taxation policy is yielding high revenue results for the excise department, while also changing drinking patterns; with people switching from higher alcohol content liquor to milder ones.
The AIB policy implemented on May 11 taxes beverages with liquor on the content of alcohol and has led to drastic price reduction in premium beer brands with alcohol content less than 5% volume/volume.
The revision on the maximum retail price (MRP) on some premium Indian Made Liquor (IML) brands has also led to an increase in the sale of some premium Scotch whiskeys.
According to official statistics, beer sales have ticked up excise revenue in the state by Rs 312.67 crore in the first quarter (April to June) logging in a growth of 19.52% in comparison to last year for the corresponding period.
The department collected Rs 1,914.81 cr revenue in beer sales alone in the first quarter this year as against Rs 1,602.14 cr in the corresponding period last year because of drastic reduction in MRP on lager beers with 5% alcohol v/v content.
The department figures on IML sales also show an uptick with the excise department collecting Rs 8,394.32 cr in the first quarter as against Rs 7,407.53 cr during the corresponding period last year. The department collected Rs 10,599.29 cr revenue in the first quarter this year as against Rs 9,266.29 cr last year for the same period with a reflecting growth of 14.39%.
‘new tax policy came at right time’
According to liquor retailers (CL2 licencees), with a lowered MRP, lager beers are literally flying off the shelf. The MRP on United Breweries (UB) Kingfisher Premium has come down from Rs 125 for a 330 ml bottle earlier to Rs 60 now, making it the most-sought-after beer followed by Budweiser, Corona and Hoegaarden from the InBev (Anheuser-Busch InBev) group, besides the locally manufactured ‘Toit’ wheat, lager and stout beers by Toit Breweries, Bengaluru and other lager beers. “All lager beers are doing well because of the reduction in prices.
The new tax policy came at the right time; during peak summers, when beer consumption usually goes up. Lowered MRP on mild beer is an added bonus,” said some liquor retailers in the city, who did not wish to be named. They added that their beer inventory has gone by 25-30% in the last one-and-a-half months.
“Though it is too early to comment, we do find people switching from hard beer (with 8% alcohol v/v) to lager beer, mainly because of lowered prices,” they added. “The main objective behind AIB is to promote quality, low alcohol beverages among consumers,” said Additional Chief Secretary (ACS), Finance, Ritesh Kumar Singh.
The government has directed IML manufacturers to bottle their brands with alcohol content not less than 40%, mainly to help increase excise revenue. The target for 2026-27 for the same has been pegged at Rs 45,000 crore. Earlier, some of them were bottling between 37% and 42.8%.
“There is, however, an exception made in the case of Vodka, to continue bottling at 37.5% because traditionally it has been so,” said an informed source. Meanwhile, the Excise department has initiated the process of online auctioning of 483 CL-2A (retail liquor shop) licences and 96 CL-9A (bar) licences, with bidding to be held in the last week of this month to monetise defunct/unused licences and improve revenue collection. The licences will be granted for five excise years, from 2026-27 to 2030-31.
