Karnataka Govt proposes additional Excise duty Hike on Beer, could lead to Rs 8-10 price upturn per 650 ml Bottle

The government's decision to enact the increase is driven by a significant rise in the sales of potent beer
Excise Duty Hike on Beer - Excise Duty - TAXSCAN

The Karnataka government has put forth a proposal for yet another hike in additional excise duty (AED) on beer, foreseeably leading to an increment of Rs. 8-10 per 650 ml bottle. The proposed hike has been outlined in a draft notification aimed at amending the Karnataka Excise (Excise Duties and Fees) Rules, 1968.

Sources indicate that the new rules, facilitating the proposed hike, are anticipated to be finalised either this month or early February.

The rationale behind the government’s decision to implement the hike stems from a substantial surge in the sales of strong beer, according to insider information. Furthermore, it has been suggested that the revenue generated from this hike will contribute to funding the Congress’ five guarantees.

As outlined in the draft notification, the additional excise duty on bottled beer manufactured within Karnataka or imported into the state is slated to increase by 10 percentage points, elevating it from the existing 185 per cent to 195 percent, reported Deccan Herald

This marks the second escalation in liquor prices within a span of six months. In July of the previous year, Chief Minister Siddaramaiah had increased the additional excise duty on Indian-made Liquor by 20 per cent and on beer from 175 per cent to 185 per cent.

Excise duty and Additional Excise duty ( AED )

Excise duty and additional excise duty are forms of indirect taxes imposed by governments on the production and sale of goods. These duties contribute to government revenue and are typically levied on specific goods or services.

Excise duty is a tax imposed by the government on the manufacture, production, or sale of goods within a country. It is often referred to as a production tax because it is applied at the point of production or manufacture. It is generally applicable to a wide range of goods, including alcohol, tobacco, petroleum products, and certain luxury items.

Additional Excise Duty, on the other hand, is an extra layer of excise duty imposed by the government on specific goods in addition to the standard excise duty. It is often applied to certain goods to achieve specific policy objectives. It is usually imposed on particular goods or sectors where the government wants to discourage consumption or promote alternative products or revenue streams.

The major difference between the both are while excise duty is a general tax on the production of goods, additional excise duty serves specific policy goals, such as discouraging consumption of certain items.

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