India: Karnataka government decides to increase taxes on beer

That pint of beer is set to become more expensive as the State government has decided to increase taxes on Bengaluru’s most popular alcoholic beverage. Chief Minister Kumaraswamy, in his budget speech, announced that the additional excise duty levied on beer will be increased from 150% to 175%, while that on draught beer is set to rise from 115% to 150%, The Hindu reported on February 8.

Excise duty on low alcoholic beverages is up from ₹5 to ₹10 per bulk litre, while the additional excise duty is up from 122% to 150%.

Manu Chandra, Chapter Head, Bengaluru, National Restaurants Association of India, said that this would make things more expensive for the consumer. “However, it’s unlikely to affect consumption patterns as people have their preferences,” he said. He noted that the Karnataka government was taxing excise heavily and it was becoming increasingly expensive to buy alcohol in the State.

A visit to the local micro-brewery will also get more expensive as the State government has decided to increase both excise and additional excise duty on beer brewed in microbreweries. Excise duty will increase from ₹5 to ₹10 per bulk litre, while additional excise will go up from ₹12.50 to ₹25 per bulk litre.

Small micro-breweries — there are 52 in Karnataka, of which 49 are in Bengaluru — may find themselves more vulnerable.

Nikhil R. Ashwath, an engineering student who visits microbreweries regularly, said, “The cost of beer at these breweries is already high. People are likely to shift to regular beer if prices increase,” he said.

An Excise Department official, however, pointed out that the excise and additional excise duty for beer at a microbrewery were lower than it is for regular beer as the State government wanted to encourage microbreweries. A microbrewery is a brewery which has an installed capacity of not more than thousand litres per day. They have to pay excise duty for 50% of their annual installed capacity.

07 February, 2019