Govt of Karnataka levies Additional Excise Duty hike on Beer; Could Lead to increase Rs.8 to 10 price per 650 ml Bottle

The Government of Karnataka has proposed yet another increase in additional excise duty (AED) on beer, which is expected to result in an increase of Rs.8-10 per 650 mL bottle. The anticipated increase has been detailed in a draft notification intended to amend the Karnataka Excise (Excise Duties and Fees) Rules, 1968.

According to sources, the new rules that will allow for the proposed raise are expected to be finalised this month or early February. According to insiders, the government’s decision to implement the hike was motivated by a significant increase in strong beer sales.

Furthermore, it has been stated that the revenue generated by this raise will go towards funding the Congress’ five guarantees.

As specified in the draft notification, the additional excise duty on bottled beer manufactured within Karnataka or imported into the state is planned to increase by ten percentage points, lifting it from the current 185% to 195%, said sources.

This is the second increase in liquor pricing in the past six months. In July of the previous year, Chief Minister Siddaramaiah raised the additional excise duty on Indian-made liquor by 20% and on beer by 175% to 185%.

What are Excise duty and Additional Excise duty?

Excise duty and additional excise duty are indirect taxes levied by governments on the production and sale of products. These taxes, which are often levied on specific commodities or services, help the government generate income.

Excise duty is a government-imposed tax on items manufactured, produced, or sold within a country. It is commonly referred to as a production tax because it is levied at the point of production or manufacturing. It generally applies to a wide range of products, including alcohol, tobacco, petroleum products, and some luxury items.

Additional Excise Duty, on the other hand, is an additional layer of excise duty levied by the government on specified items in addition to ordinary excise duty. It is frequently used on specific items to attain policy goals. It is frequently applied to certain items or industries where the government want to discourage consumption or encourage alternative products or revenue streams.

The main difference between the two is that excise duty is a general tax on the production of commodities, whereas additional excise duty serves specific policy aims, such as discouraging the consumption of certain things.