Brewers’ body asks Karnataka govt not to hike taxes on beer

Bengaluru: The Brewers Association of India (BAI) ,on Sunday, urged the Karnataka government to withdraw proposed amendments to beer regulations and hike in taxation, 'saying these would work against both the government and the industry'.

This comes in response to a draft notification issued by the Karnataka government on August 23, intending to amend the Karnataka Excise (Brewery) Rules, 1967, under the Karnataka Excise Act, 1965.

Raising objections to the proposals, BAI, in a press release, said, "The draft notification introduces a new definition of beer which, amongst others, limits the addition of sugar to 25 per cent in beer and makes it mandatory for the beer products to display the content of malt and sugar on the label."

"The draft notification also proposes to increase the excise duty on strong beer by 100 per cent to Rs 20 per bulk litre, increasing the minimum billing price for beer in the state to Rs 300 per case and increases additional excise duty to 195 per cent of the billing price or Rs 130 per bulk litre whichever is higher, " the release added.

“Beer has no sugar in it. There is a definition of beer set by the Food Safety and Standards Authority of India (FSSAI) which are followed by all states and we don’t see the need to change it by one state," said Vinod Giri, director general of the BAI.

“The proposed tax increases are going to hit consumers in two ways. One, the price of strong beer, which accounts for 90 per cent of beer sold in the state, will go up by Rs 10-15 per bottle making it amongst the most expensive in the country, and raise the minimum price of the beer from current Rs 95 per bottle to Rs 140 per bottle," Giri added.

BAI said that the taxes on beer have already been increased twice in the last one year and one more tax increase will push the beer price amongst the highest in the country.

In July 2023, the state increased additional duties on beer from 175 per cent to 185 per cent of declared price. In February this year, it was again increased to 195 per cent.

Flagging concerns about the effect of tax hike on sales of beer in the state, BAI added that this will encourage cross border unlawful imports, eventually leading to fall in tax collection.

"Due to the impact on MRP, we estimate the tax revenues from the beer category may actually fall to the tune of Rs 400 crore revenue from this proposal," the letter to the government on October 25 said.

According to the letter, the beer industry in the state contributed over Rs 5,500 crore in the financial year 2023-24 to Karnataka’s excise revenue.