Karnataka unveils draft excise policy, links liquor prices to ‘social cost’

Bengaluru: The state government on Thursday rolled out a Whatsapp chatbot and a dedicated consultation portal for public feedback on draft Karnataka State Excise Reforms 2026. The draft was released on Wednesday, proposing a major overhaul of the liquor policy by linking prices to the true social cost of alcohol consumption.  

According to the draft, while alcohol generates Rs 34,600 crore annually for the state exchequer, its social costs, including road accidents, domestic violence, liver disease, alcohol use disorders and lost household income, are estimated at Rs 51,000 crore.  

“The policy marks a shift towards a citizen-centric framework, where prices reflect the true social cost of alcohol consumption,” the Chief Minister’s Office said in a release.  

Key proposals

The draft policy moots a strength-based taxation system, where excise duty will be linked to alcohol content along with VAT, moving away from the current ad valorem system. It also proposes QR-based supply chain tracking to curb illicit trade, simplified digital licensing, and standardised health warnings on bottles.  

The reforms aim to reduce overall alcohol consumption by 8–9% over the next six years and nudge consumers towards lower-strength beverages. Officials said the formula-based taxation will simplify the current complex structure and strengthen monitoring and compliance.  

“The government reiterates its commitment to participative governance,” the CMO said, inviting feedback from citizens, stakeholders, and experts.  

Public consultation

Comments can be submitted on the official consultation portal at http://www.civis.vote/consultations/1524/read or through a dedicated WhatsApp chatbot.

Users can access the chatbot by sending the keyword “karnatakaexcise” to https://wa.link/uv7q49.