Karnataka releases State Excise Reforms 2026 for public consultation, proposes shift to 'social cost' pricing and strength-based tax

Bengaluru (Karnataka) [India], April 30 : The Government of Karnataka has released the draft Karnataka State Excise Reforms 2026 for public consultation. The policy marks a shift towards a citizen-centric framework, where prices reflect the true social cost of alcohol consumption.

While alcohol generates Rs 34,600 crore annually, its social costs road accidents, domestic violence, liver disease, alcohol use disorders, and lost household income are estimated at Rs 51,000 crore, according to a release from Karnataka CMO.

The policy proposes a strength-based taxation system (excise linked to alcohol content + VAT), QR-based supply chain tracking, simplified digital licensing, standardised health warnings, and a shift from a quota-based retail system to a registration-based framework, with restricted zones near schools and hospitals.

Additionally, a portion of excise revenue will be earmarked for de-addiction services, road safety, domestic violence prevention, and youth awareness campaigns to support responsible consumption.

The reforms aim to reduce overall consumption by 8-9 per cent over six years, encourage a shift towards lower-strength beverages, simplify taxation through a formula-based approach, and strengthen monitoring and compliance to reduce illicit trade, the release said.

The Government of Karnataka reiterated its commitment to participative governance and invites citizens, stakeholders, and experts to share their feedback by visiting the official consultation portal.

Earlier on April 24, Karnataka Chief Minister Siddaramaiah announced the state's internal reservation distribution, allocating 5.25% each to the Left and Right communities, and 4.5% to Bovi, Lambani, Korama, Koracha, and Alemari groups.

Speaking on the occasion, CM said, "There has been a struggle over internal reservation for many years. A convention was organised by the party in Chitradurga, in which Mallikarjun Kharge, other leaders, and I had participated. At that convention, a resolution was passed to implement internal reservation. The party had organised a convention in Chitradurga. We had organised a convention for Scheduled Castes. Kharge had attended it. The convention was held under the leadership of Parameshwara. There, everyone demanded internal reservation."

He further stated that, "Left-hand, right-hand, Korama, Koracha, all had participated. There was consensus there in support of internal reservation. A manifesto committee was formed under Minister Parameshwara's leadership. We had formed a full committee before the elections, and in 2024, the Supreme Court gave its verdict. The judgment said an internal reservation could be provided. After that verdict, we formed a commission. It was constituted under the leadership of Justice Nagamohan Das. We placed that report before the Cabinet. In that report, they had recommended 6-5-4-1-2. Later, the Governor gave assent to the law. After that, confusion arose again over the law."

Siddaramaiah explained that legal challenges from nomadic communities regarding roster points led to a High Court ruling reaffirming the 50 per cent reservation cap, despite his government's efforts to increase the combined SC/ST quota to 24 per cent.

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