Karnataka Unveils India's First AIB-Based Excise Duty System

Karnataka's government has introduced an Alcohol-in-Beverage (AIB) excise duty structure to rationalize liquor pricing, making it cheaper. Implemented from May 11, 2026, this system aims to align Karnataka's liquor prices with neighboring states. Indian Made Liquor slabs reduced from 16 to 8, deregulating government-administered price fixation.

The Karnataka government has introduced a pioneering Alcohol-in-Beverage (AIB)-based excise duty structure, marking a significant shift in the state's liquor taxation policy. A press release by the State Excise Department stated that this is the first time India has adopted such a model, aligning with global standards and Chief Minister Siddaramaiah's 2026-27 Budget announcement.

Under this new framework, effective from May 11, 2026, the excise duty aims to rationalize the pricing of alcohol, making it more affordable for consumers and comparable to prices in neighboring states like Tamil Nadu and Andhra Pradesh. The initiative signals a major deregulation as the government steps back from price fixation, allowing producers to set prices based on market demands.

Furthermore, the restructuring effort has condensed the categories of Indian Made Liquor from sixteen to eight slabs. This move aims to ensure that liquor is not only available at reduced prices but is also consistent with rates in neighboring states. The new pricing impacts popular Indian Made Liquor (IML) and beer brands, varying by slab, pack size, and alcohol content.