Karnataka Proposes New Alcohol Tax Policy, Boosting Liquor Stocks

The Karnataka government's recent draft notification proposing a shift to an alcohol-by-volume (ABV) based excise duty has led to a notable rise in shares of liquor companies. This significant change aims to amend a long-standing taxation policy by basing taxes on actual alcohol content. Key features of the new policy include a proposed duty of Rs 1,000 per litre of pure alcohol for various products. The draft will undergo further consideration after a consultation period, allowing stakeholders to voice their opinions. Discover how this new policy could impact the liquor market and stock performance.

By Narendra Chaudhary Apr 20, 2026, 14:28 IST

Karnataka's Shift to ABV-Based Excise Duty

Following the Karnataka government's draft notification suggesting a transition to an alcohol-by-volume (ABV) based excise duty system, shares of various liquor companies, including Tilaknagar Industries, Radico Khaitan, and United Breweries, saw an increase of up to 3% on Monday. This proposed change aims to revise a taxation policy that has been in place for over sixty years, with taxes now being determined by the actual alcohol content in beverages. A notable aspect of the Bill is the introduction of the term 'Alcohol-in-Beverage (AIB)', which indicates the alcohol concentration per litre in drinks. Stocks of breweries such as Tilaknagar Industries, Radico Khaitan, and United Breweries (UBL) were observed trading at gains of 3.5%, 3%, and 2.3%, respectively, with Radico Khaitan and UBL emerging as top performers on the Nifty FMCG index.

Highlights of Karnataka’s Revised Alcohol Policy:

The new alcohol policy not only introduces the concept of Alcohol-in-Beverage but also outlines the excise duty applicable to distilled spirits supplied to distributor licensees. According to the proposal, a duty of Rs 1,000 per litre of pure alcohol will be imposed on products produced within Karnataka, as well as those imported from other Indian states or from abroad. A similar rate of Rs 1,000 per litre is suggested for bottled beer supplied to distributors. However, the existing pricing structure based on bulk litres and alcohol strength will remain for retail supplies to defense and paramilitary canteens. For beer, the duties will be set at Rs 12 per bulk litre for alcohol content up to 5%, and Rs 20 per bulk litre for beer with an alcohol content exceeding 5% but not surpassing 8%. The revisions also introduce specific price-based slabs for spirits and beer, detailing rates per litre of pure alcohol, effectively merging price bands with alcohol-content-based taxation. The draft will be reviewed after the consultation period, during which stakeholders can submit their objections or suggestions to the finance department.