Beer to get costlier in Karnataka as state hikes excise tax third time in two years

Beer prices in Karnataka are set to rise following the state government’s decision to increase the tax on beer to 205% of the manufacturing cost, up from the earlier 195%. The revised rates are part of new draft rules issued by the state, which also include a 10% hike in the Additional Excise Duty (AED).

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According to reports, this revision is expected to push the price of premium or imported beer brands up by around ₹10 per bottle, depending on their production cost. More affordable, local or mid-range beers are likely to see a smaller price bump, below ₹5 per bottle. Actual price changes will vary across brands.

With this move, the government has also abolished the earlier dual taxation system. Previously, cheaper beers were taxed at ₹130 per litre, while higher-end options were taxed based on a percentage of the manufacturing cost. Now, a single tax slab of 205% will apply uniformly to all beer brands, regardless of their market segment. Officials say this step is aimed at simplifying the tax structure.

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Third hike in two years

This is the third increase in beer taxation in last two years. In July 2023, the newly elected Congress government raised the AED from 175% to 185%. That was followed by another revision in January 2025, where the AED went up to 195% or ₹130 per bulk litre, whichever was higher.

Alongside AED changes, the base excise duty was also altered earlier. The government introduced a tiered system based on alcohol strength, replacing the previous flat rate. Under this rule, beer with up to 5% alcohol by volume (ABV) attracts a duty of ₹12 per bulk litre, while stronger beer with 5–8% ABV is taxed at ₹20 per litre.