In a bid to bring liquor prices on a par with the neighbouring States, Karnataka will rationalise excise duty slabs, which is likely to bring down the prices of premium liquor while increasing lower end liquor marginally during the next financial year.
May miss target
Without announcing any increase in excise duty, Chief Minister Siddaramaiah on Friday announced that the excise duty slabs on IML and beer will be rationalised and make Karnataka competitive with neighbouring States. Incidentally, the Excise Department had been given a target of ₹36,000 crore owing to reduced demand, and the department is likely to miss its target. The government revised the excise duty rate for beer last month as the State reported a higher beer sales.
Finance Department sources said that the rationalisation of slabs had been a demand from the industry for sometime as certain slabs or rate had become redundant, making the liquor prices uncompetitive. “Because of the higher price, Karnataka is losing business in the high end liquor sales,” a senior Finance Department official explained, adding that the distilleries had also complained of increasing cost of production but lower returns.
He said, “While premium liquor contribute about 2% to 3% of the total excise revenue in Karnataka, it contributes about 52% of the total excise revenue in Telangana. The prices of beer will also be looked into.” The official said that the reduction in excise duty is expected to mop up more revenue.
On the expected time frame for rationalisation, the official said it is likely to be implemented during the next excise year, which starts from June.
