Alcohol To Get Cheaper In Karnataka? Govt Brings New Tax System For Liquor Prices

The Karnataka government has introduced an Alcohol-in-Beverage (AIB)-based excise duty structure and revised liquor prices across the state. Authorities say the move is meant to rationalise taxation, reduce retail prices for consumers, and narrow price gaps with nearby markets such as Tamil Nadu, Andhra Pradesh, Telangana, Maharashtra and Kerala.

The State Excise Department explained in a press note that this model follows chief minister Siddaramaiah’s 2026-27 Budget announcement. Officials have said the updated system focuses on affordability while keeping tax structures competitive with neighbouring states, so consumers in Karnataka do not pay significantly higher rates for similar alcoholic beverages.

AIB-based excise duty structure and liquor pricing in Karnataka

The department stated, “For the first time in India, the AIB-based excise duty structure has been implemented in Karnataka from May 11, 2026. It is globally recognised as the gold standard for alcohol taxation.” A government notification dated May 8 detailed how these changes will apply to various liquor categories sold within the state.

Under the new excise policy, the government has fully withdrawn direct control over price fixation for liquor. The State Excise Department said price determination is now deregulated, and producers will decide product placement within tax slabs based on market strategy, demand, and competition, rather than through administrative price-setting by the government.

Indian Made Liquor (IML) slabs have been “rationalised and reduced from the earlier 16 slabs to eight slabs,” according to the notification. The department added that the restructuring aims to keep Karnataka liquor prices cheaper, or at least comparable, with those in Tamil Nadu, Andhra Pradesh, Telangana, Maharashtra and Kerala, covering both IML and beer varieties.

Revised rates now cover a wide range of popular Indian Made Liquor and beer brands. Prices will differ depending on each slab, bottle size and alcohol content. Officials have indicated that the new AIB-based excise duty structure is expected to bring more transparent taxation while offering relatively lower retail prices for consumers across Karnataka.