Your peg will cost more

Your peg will cost more

Liquor, beer, fortified wine and even low alcohol beverages are all set to cost more with the State government affecting an across the board hike in additional Excise duty (AED) from April 1.

In his budget proposals for the financial year 2012-13, Chief Minister D V Sadananda Gowda, who also holds the finance portfolio, announced a 7.5 to 10 per cent hike in AED on Indian Made Liquor (IML) depending on the cost declared by the manufacturer. The AED on beer and Low Alcoholic Beverage (LAB) will also be hiked by 7 per cent.

For the consumer, the hikes convert into increase in prices of liquor between Rs 1.96 and 12.24, while price of a bottle of beer will move north at least by Rs 3 (See chart). Wine will also cost more by 10 per cent, Excise department officials said.

The hike in AED will result in additional mobilisation of Rs 500 crore for the department. A target of Rs 10,770 crore has been set for the year 2012-13.

The excise duty structure for liquor and beer in the State works like this. For beer, as per the present structure, the excise duty is Rs five per bulk litre and an additional excise duty equivalent to the declared price stipulated by the manufacturer is imposed. In other words, if the manufacturer fixes Rs 45 as the declared price for a 650 ml beer bottle then AED is levied on the same rate, that is Rs 45 taking the MRP of the beer bottle to Rs 90. Now the AED has been increased to 122 per cent of the declared price.

The duty structure for IML is more complicated. An uniform excise duty of Rs 45 per bulk litre is levied on IML irrespective of the brand and quality. On this, an AED is imposed depending on the declared price (the price fixed by the manufacturer). These rates have been hiked from a minimum of 7.5 to 10 pc.

The government had hiked AED between 10 and 20 per cent only last year.


To encourage micro-breweries to come up in the State, the government will relax the pre-condition of possessing bar or club or hotel licence for obtaining micro-brewery licence. Licence will be issued for independent micro-breweries, Gowda said.

In another policy decision, the State government will allow selling of  fortified wine in wine taverns and boutiques. However, alcohol strength will have to be reduced from 24 to 16 v/v (volume by volume) per cent and the fruit wine content fixed to a minimum of  7 v/v %. To encourage fruit wine consumption, AED on fruit wine will be reduced by 50 per cent, Gowda said.

* The minimum increase in price of a 180 ml bottle of Indian Made Liquor (IML) will be Rs 1.96
* Maximum increase on a 180 ml of high end IML will be Rs 12.24
* A bottle of  650 ml lager beer costing Rs 74.47 will cost Rs 77.32 following hike in Additional Excise Duties
* A bottle of 650 ml premium beer costing Rs 76 will cost Rs 79.4 following hike in AED
* Fortified Wine and low alcohol beverages to cost 10 per cent more