Karnataka Halves Proposed Excise Fee Hike, Extends License Validity
The Karnataka government has rolled back its initially proposed 100% increase in excise licence renewal fees, opting instead for a 50% hike effective from July 1, 2025, following strong appeals from distillers and retailers. The revised structure also extends licence validity from one year to five years—an industry demand that promises relief and efficiency.
Under the new fee regime, licenses in metropolitan corporations with populations exceeding 2 million (such as Bengaluru) will now cost ₹9 lakh annually, down from the originally proposed higher rates. Other metropolitan areas will pay ₹7.5 lakh, municipal corporations ₹6.75 lakh, and smaller towns ₹6 lakh. Additional categories have also been revised: distilleries with warehousing obligations will now pay ₹67 lakh, breweries ₹1.5 lakh, craft breweries ₹25,000, fortified wine producers ₹25,000, and airport bar charters ₹18.75 lakh per year. These changes are anticipated to boost state coffers by over ₹300 crore annually while addressing industry concerns.
Karnataka excise
Finance Minister R. B. Timmapur explained that the initial doubling of licence fees was expected to generate ₹600–700 crore annually, but widespread resistance prompted a compromise. Representatives from the Karnataka Liquor Sellers’ Association and other stakeholders had lobbied for a modest 20–25% increase, finally securing a middle-ground adjustment.
The extended five-year validity period will shift regulatory verification from annual to quinquennial, streamlining operations and reducing administrative friction. According to stakeholders, this change could also help curb bribery during inspections.
Fee hike
While large retailers welcomed the revised policy, small-scale producers and micro-distilleries argue that the universal 50% hike disproportionately affects them. Mysuru-based craft rum distillery Huli—currently paying around ₹63 lakh per year—will see its fee escalate to approximately ₹90 lakh, prompting threats of relocation to neighbouring states offering more favourable terms.
Andhra Pradesh has reportedly replied swiftly, extending a “tailor-made excise policy” and incentives to attract such businesses. Industry groups note that Karnataka’s steep liquor taxation—already high compared to the rest of the country—has grown sharply: beer taxes have risen four times in the past 24 months, pushing up prices and squeezing sales.
Licence renewal
Over 13,000 licence holders across Karnataka will need to renew under the updated fee structure starting in July. Associations are continuing to push for further concessions, such as allowing instalment-based payments. The extended licence validity, however, is seen as a significant step towards reducing routine regulatory burden.
