BENGALURU: Chief Minister Siddaramaiah on Friday announced a Rs 45,000-crore excise revenue target for FY 2026-’27, citing a 12.7% growth compared to the corresponding period of the previous year.
The New Indian Express, on March 5, was the first to break the news on the proposed increase in excise revenue target for the new fiscal, giving the exact figure of Rs 45,000 crore.
“The hike in revenue target effectively means that excise and additional excise duty (ED) and (AED) in the economically priced category of Indian Made Liquor (IML) in the first four slabs may go up again because 80-85% of excise revenue comes from these slabs,” industry sources said.
Last year, Siddaramaiah raised the AED on the first four slabs (with lowest MRP) of IML by Rs 15.
The CM’s 17th budget was not just about increasing revenue target, the template of which is now set on regular hikes in AED on IML and beer, he also announced reforms in the decades old excise taxation policy, from bulk litre of IML to percentage of alcohol in beverage (AIB) citing global practices, and the phased rationalisation on the existing slabs; from 16 to eight. IML in Karnataka is priced and taxed according to its slab. Presently, there are 16 excise slabs, with the cheapest IML falling in the first four slabs and the most expensive ones in the 16th slab.
“An Alcohol-in-Beverage-based excise duty structure is globally recognised as the gold standard for alcohol taxation, as it directly targets the alcohol content which is the primary source of negative externalities. This will be introduced from April 2026,” the CM announced.
The government proposes to have a uniform level of ED whereas AED will be levied within a “defined range” based on an ex-factory price slab basis. “We will ensure that the price changes are gradual and not disruptive. The system of levying uniform excise duty based on the alcohol content per litre will be introduced in stages in the next three to four years. Under the new policy, the government administered price fixation will be completely deregulated. Product placement within slabs will be left to producers based on market considerations,” the CM said.
Industry sources, however, told The New Indian Express that Karnataka always had a free pricing policy on IML since the inception of Karnataka State Beverage Corporation Limited (KSBCL) in 2003.
In a big cheer to the beer industry, the “mandatory labels on malt and sugar content on beer will be removed,” the CM said.
“In most parts of the world, beer labels do not contain malt and sugar content. This was creating marketing issues outside Karnataka,” the sources said.
Other reforms announced in the budget include streamlining and simplifying the renewal and validity period of various licences, and use of technology to curb revenue leakages through blockchain-based digital tracking systems. Physical escorts for dispatches will be replaced with geo-fenced e-lock systems. Distilleries and breweries will be permitted
24-hour operations and dispatch. Transfers of excise superintendents and deputy superintendents will now be conducted through digital counselling as is being done for the Group-C cadre, including excise inspectors, sub-inspectors, head constables and constables. Tourism in the alcohol sector will be encouraged.
“The draft RMC report will be placed in the public domain shortly for consultations. Reforms that require legislative approval will be introduced in the form of a new and comprehensive Excise Bill,” Siddaramaiah said.