Karnataka becomes first state in India to implement alcohol-in-beverage based excise duty

Bengaluru (Karnataka) [India], May 17 : Karnataka has become the first State in India to implement an Alcohol-in-Beverage (AIB) based excise duty structure, with the new policy coming into effect from May 11 this year.

The State Excise Department said the move follows the Chief Minister's 2026-27 Budget speech. The AIB-based structure is globally recognised as the gold standard for alcohol taxation.

Under the new policy, government-administered price fixation has been completely deregulated. Product placement within slabs has been left to producers based on market considerations.

As per the Government Notification issued on May 8, Indian Made Liquor (IML) slabs have been rationalised and reduced to 8.

The department said the move aims to ensure the availability of liquor at cheaper rates for consumers in the state and keep prices lower and relatively equal to neighbouring states, including Tamil Nadu, Andhra Pradesh, Telangana, Maharashtra, and Kerala.

The revised Maximum Retail Prices (MRP) of several selling liquor and beer brands have been enclosed with the press note, the Excise Commissioner's office said.

The shift to the AIB-based structure was initially announced by the Chief Minister during the 2026-27 Budget speech. Following up on that commitment, the government issued Notification on May 8, 2026, amending the Karnataka Excise (Excise Duties and Fees) Rules, 1968.

Instead of the state rigidly setting prices, producers now have the flexibility to place their products within specific pricing slabs based on market considerations and alcohol content.

In a letter dated May 16, 2026, addressed to the Commissioner of the Department of Information and Public Relations, the Excise Commissioner's office stressed the importance of public awareness regarding the new pricing.

The department has requested the immediate publication of the revised MRP list for popular liquor and beer brands, detailing both prices and sizes, in leading state-level Kannada and English newspapers.

The new AIB structure marks a historic shift toward deregulation in the Indian liquor industry, balancing market-driven pricing for producers with structured slabs intended to rationalise costs for the consumer.

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